Key takeaway: With 90% of payment firms now holding a stated plan — near-term or longer-term — to adopt or expand KYC and identity automation, treating identity checks as a bolt-on rather than a core fraud control is becoming the exception, not the norm.
Nearly two-thirds of payments-heavy firms plan to adopt or expand identity verification and KYC (Know Your Customer) automation within the next 12 months, according to new research from PYMNTS Intelligence produced in collaboration with Plaid.
The study, titled “Payment Protection: Why Firms Still Aren’t Real-Time Ready,” found 65% of firms have near-term plans for KYC and identity-verification automation, with another 25% planning it further out, bringing the total with a stated plan to 90%. A further 9% are considering the technology without a firm timetable, and just 1% said they weren’t considering an upgrade at all.
Identity automation ranked second only to reconciliation automation among near-term priorities, ahead of AI-based fraud detection and secure bank connectivity: 70% of firms plan to adopt or expand reconciliation automation within the year, the single highest near-term item in the study, while AI-based fraud detection and secure bank connectivity or open banking each drew 59% — putting identity and KYC six points ahead of both.
PYMNTS noted that firms are pursuing several of these upgrades simultaneously rather than picking one: “modernization does not mean firms are abandoning existing systems,” the report said, pointing to 51% of firms who still plan to spend on legacy infrastructure maintenance in the same period.
The push comes as fraud pressure builds. A related finding from the same PYMNTS/Plaid research shows 57% of firms faced more fraud attempts in the past year than the year before, with incoming customer payments the top risk area for nearly half of firms surveyed, and just 6% of firms saying they were fully ready for new ACH (Automated Clearing House) fraud regulations by the time they take effect.
Why it matters: For merchants, this is a signal that KYC and identity checks are moving from a compliance checkbox to a front-line fraud tool, and that most peers are already budgeting for it. Merchants who haven’t automated identity verification risk falling behind processors and competitors on both fraud losses and approval speed.
Sources:
- PYMNTS.com: https://www.pymnts.com/authentication/2026/identity-automation-moves-up-the-payments-agenda/
- PYMNTS Intelligence/Plaid study: https://www.pymnts.com/study/real-time-payment-protection-fraud-defenses/
