News & Views - Savantor

Prevailing Trends

Sunday, 16 September 2018

There are a number of trends prevalent across the payments market today which can be seen to be indicative of how the payments landscape has evolved during 2018.

The latest annual payments survey released by the British Retail Consortium shows that for the first time ever, cards now account for over three quarters (76%) of the value of retail purchases in the UK. This increase has been encouraged by the popularity of contactless as a means of payment for small value purchases.

Alongside this cash has continued to decrease in popularity, both as a percentage of the volume of retail transactions (down 0.5%) and value of retail sales (down 1.2%), where it now accounts for only 22% of retail transaction value.

At the same time, the increase in online and mobile shopping is continuing to have an impact on physical bank branches, with an announcement by RBS this month of the forthcoming closure of another 54 branches in England and Wales in January with the loss of 258 jobs. Since 2014, branch transactions across RBS in England and Wales are apparently down 30%, whilst there has been a 53% increase in the number of customers using mobile banking during the same period.

However, the trend of branch closures is not limited to the UK; the latest figures from the European Banking Federation show an ongoing decline in branches across the region. In its annual report the EBF reports that European banks closed almost 6000 branches in 2017, and that by the end of 2017, European banks employed 40,000 staff fewer than in 2016 and the least since the ECB began its data series in 1997.

The fall in use of cash can also be seen to have had an impact on the availability of free-to-use ATM’s. Apparently, according to Link, more than 250 free-to-use cash machines are being shut down a month as operators close down unprofitable ones. Whilst there are 53,000 free-to-use machines in the UK, the number is shrinking at a record rate partly as a result of people using less cash and the demand for cash withdrawals falling.

Although Link has set up "specific arrangements” to protect free-to-use ATMs more than 1km away from consumers’ next nearest free-to-use ATM, apparently 76 of these protected cash machines closed between January and July. As a result the Payment Systems Regulator has expressed concern and is ‘taking action’ to ensure Link meets its commitments.

Success in one area of payments (use of cards; contactless) inevitably does not come without a corresponding negative impact on another area – but that is the process of evolution.

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