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Payment trends

Tuesday, 16 June 2020

UK Finance has just issued its detailed analysis of the use of all types of payments in the UK during 2019.

According to the report, during 2019 there were 40 billion payments made in the UK in 2019, for the first time over half of which (51%) were made using cards. Key drivers of this growth continued to be online and contactless payments, with 80% of UK adults using contactless payments in 2019.

Debit cards accounted for 42% of all payments in the UK and remained the most frequently used payment method, accounting for four in ten payments. In 2019 debit card payment volumes increased by 12% reaching 17 billion. The continued increase in debit card use is seen as driven by a number of factors including the continued growth in popularity of contactless payments and the increased speed of migration of payments away from cash.

Credit cards saw an increase of 7% over the previous year, with 3.5 billion payments being made using this method.

During 2019 the number of contactless payments made in the UK increased by 16% to 8.6 billion payments. This was driven by the continued roll-out of contactless cards, especially credit cards in the last 12 months; the continued roll-out of card acceptance devices; and consumers becoming increasingly comfortable and familiar with making contactless payments.

By the end of 2019 there were 132 million contactless cards in circulation, with 85% of debit cards and 74% of credit cards in the UK having contactless functionality.

The percentage of all payments made using contactless cards was 21%, up from 15% in 2017 and a mere 3% in 2015.

As well as using contactless cards other devices such as mobile phones and watches were used at point of sale and online. Nearly ten million people, or 18% of the adult population, registered for mobile payments in 2019 with 79% of these registered users undertaking a payment.

Cash payments continued to decline during 2019, resulting mainly from the increased use of debit cards and online payments. However, cash was still the second most frequently used payment method in the UK in 2019, being used for just under a quarter of the total number of payments made.

The percentage of all payments made using cash was 23%, down from 48% in 2014 and 58% in 2009.

However, a recent survey by Nationwide Building Society indicates that during the pandemic consumers have gone an average of 44 days without using cash in favour of contactless payments. With such a drastic decrease in ATM usage, politicians have written to the Chancellor to bring forward legislation urgently to protect the UK's cash infrastructure by reviving free-to-use cash machines for local economies and communities and reversing cuts to interchange fees. There are major concerns that the vulnerable, the elderly and those living in rural communities could struggle with the move away from cash.

Going forward it will be interesting to see how the current pandemic has affected payment trends and the payment behaviour of consumers. It seems likely that the impact of the past three months has been to accelerate existing trends in payments – the increased use of contactless, the increase in online shopping and the decrease in cash usage. Whether these trends continue or revert to previous levels and any resulting impact remains to be seen.

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