Retail Payment Methods: What’s Changing and What Merchants Need to Know

The way customers pay is shifting fast. If you are running a shop in the UK, understanding the changing landscape of retail payment systems is essential. Between the rise of digital wallets, the slow decline of cash and the growing appeal of novelty options (such as those powered by open banking, including but not limited to ones using QR code payments), retailers now face more choice than ever when deciding how to accept payments. The trick is to pick solutions that meet customer expectations, reduce costs and keep up with retail payment trends.

What is a Retail Payment System?

For anyone wondering what a retail payment system actually is, it refers to the technology or method that allows a customer to pay for goods or services. It might be as traditional as handing over coins at a market stall or as modern as tapping a phone to a card reader. But increasingly, retailers are expected to offer several payment methods to keep customers happy. Below, we look at the dominating retail payment methods. 

Credit & Debit Cards – Still On The Rise

In the UK, debit and credit cards still hold the crown when it comes to payments in retail. According to UK Finance, card transactions in Britain amounted to as much as £1 trillion in 2024, This is hardly surprising, as contactless functionality and familiarity make cards convenient for shoppers. For in-store retail payments, card terminals remain a familiar sight and tapping a card is almost second nature for many customers.

Digital Wallets – A Modern Alternative

The dominance of cards is slowly being challenged. Digital wallets like Apple Pay and Google Pay are no longer niche. Many customers nowadays prefer mobile wallets and contactless payments with their phones over pulling out a physical card. Mobile wallets are especially popular with younger shoppers and those making small, frequent purchases. They also bridge the gap between in-store and online experiences, as users can store loyalty cards, receipts and rewards all in one place.

Cash – Still King in Physical Stores?

Despite the common belief that most payments are still done with cash, it is not the case anymore. In recent years, and especially during and following the pandemic, cash use in the UK has dropped significantly. While it remains relevant for certain demographics and transaction types, especially in rural areas or among older consumers, fewer and fewer people are reaching for coins and notes. In fact, UK Finance reports show that just 12% of payments were made in cash in 2023, a steep decline from previous years. While many shops still accept cash, it is no longer the standard retail payment option it once was.

That said, some shoppers still prefer cash for privacy reasons or to control their spending. Retailers should not be too quick to abandon it entirely, especially if they operate in areas where digital infrastructure is patchy or their customers tend to be cash-reliant. The overall direction, however, is very clear: digital is taking over.

The Rise of QR Code Payments

One of the most noticeable shifts in recent years is the rise of QR code payments when it comes to retail payment processing. Once mainly seen on menus and tickets, QR codes are now gaining real ground at the retail till. While markets like China and India have led the way, the UK is quickly catching up. With over 94% of adults owning smartphones and more than 40% using mobile contactless, consumers are ready — and so are many merchants looking for simpler, cheaper ways to get paid.

Traditional card payments come with rising fees and monthly hardware costs that cut into margins. In contrast, Noda’s QR payments offer a cleaner alternative. There is no need for a card terminal. Businesses simply generate a code, customers scan it, and the payment goes straight from their bank account. No cards, no middlemen, no waiting.

While some other companies also provide QR code payments, these often rely on card or wallet networks, so merchants still face significant fees and delays despite saving on terminal rental. This is exactly where Noda comes in. Noda’s QR solution uses open banking to let UK merchants accept instant Pay by Bank transfers, both in-store and online. There are no setup costs, and with a flat 20p fee per transaction, merchants skip the usual card charges entirely. The system works with dynamic or fixed amounts, and setup takes minutes. Payments settle instantly via Faster Payments, and every transaction is visible in real time.

For in-store businesses in particular, Noda’s QR payment system removes the cost and complexity of maintaining card terminals. Because it is powered by open banking, payments flow directly from the customer’s account to the merchant’s — with no acquirer, no card scheme fees, and no need for hardware rental. This not only speeds up transactions but also improves cash flow and reduces overheads, making it an ideal solution for small and medium retailers looking to streamline operations.

For retailers fed up with the cost and friction of card payments, Noda’s QR code payment system in UK offers a modern, low-cost alternative that is simple for businesses and customers alike.

Why Open Banking Matters for Retail Payments

Open banking is revolutionising the online world and e-commerce, but we do not often hear about the fact that it also offers real practical value when it comes to payment methods in retail stores. It allows consumers to pay directly from their bank account to the merchant, without intermediaries like card networks. This reduces costs for the business and increases transparency for the customer.

When paired with QR code payments, open banking offers a quick, cost-effective and secure alternative to traditional payment methods. There are no cards to skim, no terminals to maintain and no high transaction fees cutting into margins. For retailers, it also means far fewer headaches with chargebacks and disputes.

Noda’s in-store QR payments are built on this open banking framework and work with all major UK banks. A customer simply scans a code with their phone, approves the payment in their mobile banking app, and the transaction is settled in real time. There is no app to install and no account to create. It works straight away and can sit alongside existing card terminals or replace them completely. The system suits a wide range of settings, from barbershops to cafés, flower shops and taxis, to individual entrepreneurs, such as plumbers and repair people, who can also send a payment link through a messenger for remote jobs or take payments for pre-bookings.

What This Means for Retailers

The message for UK and European retailers is clear. Card payments are still crucial, but they are no longer the only game in town. As digital habits shift and customer expectations rise, merchants need to think about the full mix of payment solutions for retail — both in-store and online.

Why Choose Noda For Your Business?

Noda provides a unified payments platform built to meet the demands of e-commerce marketplaces. Benefits include:

• QR code payments for in-store transactions starting at 20p per transaction.
• Broad coverage. Connected to all major UK banks.
• Receive payments instantly into your bank account.
• Intuitive design. QR payment codes can be printed, displayed on screens, or shared as a link for the customer’s and merchant’s comfort.
• Sign up and be live in 24 hours or less.

Book Your Free Demo – Discover how Noda can help your business accept payments.