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Sounds more like a design decision. Do you have any suggestions besides not using iframes?

No, since there's no way to check iframe's domain I don't think it can be fixed for iframes.

They should stop asking for user's password right there, because it makes people trust any iframe

Maybe they can force login via their main site first. Lousier user experience though.

Lousy user experience is not being able to verify what site I'm about to enter my payment credentials into.

It would be a terrific experience if there was no reason to worry.