Research from Payit by NatWest reveals 55% of UK businesses report concerns regarding payment fraud or security, even as 47% now incorporate Open Banking into their payment mix.
More UK businesses are reporting issues with fraud, security, and cash flow in their payment processes compared to a year ago – this despite the broader adoption of Open Banking, according to the ‘Frictionless Payments 2026’ report by Payit by NatWest.
The report shows 47% of businesses have now integrated Open Banking into their payment mix, and even among those not yet using it, 94% indicate plans to test it within the next 12 months.
At the same time, the proportion of businesses reporting concerns about fraud or security in their current payment processes has risen to 55% – an increase of 12% compared to 2025. Furthermore, 54% report cash flow issues linked to payment processes, a year-on-year increase of 10%.
According to Payit, these challenges are not limited solely to businesses that have yet to modernise their payment systems.
James Hodgson, CEO of Payit by NatWest, said: “Since last year the picture has changed: while Open Banking adoption is on the increase, frictions have not necessarily reduced in tandem. There’s clearly a gap between Open Banking’s potential and the reality of what businesses are currently experiencing.
“Trust is crucial, and customers are demanding tight regulation to ensure providers are held to high standards.”
Almost all respondents (93%) indicated that it is highly important for an Open Banking provider to be subject to the same requirements and oversight as a bank.
Financial services leverages the most payment methods
The Payit report finds financial service providers utilise the widest variety of payment methods.
They are the most frequent acceptors of card payments (68%) and lead the way in the adoption of Open Banking (59%). Approximately 65% report their payment process entails high transaction costs – the highest percentage across all sectors – yet they rank lower costs as the lowest priority for improvement; instead, they prioritise a better customer experience (31%).
Companies in the transport sector make the most frequent use of direct debits (60%) and reported the highest levels of friction in the survey. For instance, 64% of respondents in this sector state they struggle with late payments, while 63% point to an inefficient or overly complex checkout process, Payit finds.
Slow refunds and cash flow issues are each cited by 60% of respondents. At the same time, this sector expresses the greatest confidence in its own payment processes: 98% indicate that they are (very or somewhat) confident that their process “runs seamlessly and reduces inefficiencies.”
Educational institutions rely most heavily on traditional bank transfers requiring manual data entry (44%); furthermore, they exhibit the lowest adoption rate of the various payment methods covered in the study.
More than half report inefficient checkout processes (57%) and slow payments (56%). The education sector most frequently reports concerns regarding fraud or security (59%) and, alongside the transport sector, shares the highest score (58%) for payment processes that are insufficiently integrated into existing infrastructure.
Payit: recurring payments named as main barrier
Improving the customer experience is the most desired enhancement for payment processes, cited by 27% of companies. For 34% of businesses, better security and fraud prevention serve as the most compelling argument for Open Banking – a figure which rises to 41% within the financial sector and 36% in professional services.
A quarter of respondents indicated that the inability to process recurring payments was the single greatest obstacle to Open Banking; among financial service providers, this figure reached 32%. According to Payit, commercial variable recurring payments (cVRP) could address this for many companies.
The report notes financial institutions, the energy sector, utility companies, telecommunications providers, the transport sector, government bodies, and charitable organisations are already eligible for cVRPs, with the e-commerce and retail sectors set to follow in 2027.
The system is managed by an industry-funded cVRP entity, supported by banks and fintech companies.
Almost all organisations (99%) indicated that access to customer transaction data – provided consent has been granted, such as historical spending and current balances – would add value to their business operations.
The most frequently cited benefit was having access to more complete and reliable data directly from the source; this was noted by 18% of respondents overall, and specifically by 23% in the financial sector and 20% in the transport sector.
Charlotte Crosswell, former Chair and Board Member of Open Banking Ltd, said: “The findings in this report show that businesses recognise this potential, but there remains a gap between what Open Banking can offer and the experience of using it today.
“Closing that gap will require continued innovation from providers, alongside the right regulatory framework to build confidence among businesses and consumers.”
