Consumers are taking a ‘pick n mix’ approach to how they make payments, with mobile banking, mobile payments and contactless all becoming increasingly popular, research by UK Finance has revealed. Just as digital technology has allowed people to customise the way they listen to music or read the news, it is now transforming the world of payments, as consumers take advantage of the ever-widening range of payment choices available to suit their needs and lifestyle.
The latest UK Payment Markets report found that almost half (48 per cent) of UK adults used mobile banking in 2018, up from 41 per cent the previous year. The number of bank payments made using online or mobile banking in 2018 grew to two billion, up from 1.6 billion in 2017, as consumers and businesses increasingly choose to bank using their phones, tablets or computers.
By the end of 2018, an estimated 8.5 million people were registered to buy goods and services using mobile payment services such as Google Pay, Apple Pay and Samsung Pay. This means that one in six (16 per cent) of the adult population are now registered for mobile payment services, up from just two per cent in 2016.
Having overtaken cash in 2017, debit cards remained the most frequently used payment method in 2018, accounting for nearly 40 per cent of all payments. Almost the entire adult UK population (98 per cent) now own a debit card and by 2024 debit cards are forecast to account for half of all payments in the country. The continued increase in debit card use has been in part driven by the growing popularity of contactless payments, which rose to 7.4 billion payments in 2018, an increase of 31 per cent on the previous year. The figures also show that older customers are increasingly embracing the convenience of this technology, with over three-fifths (61 per cent) of over-65s making contactless payments in 2018, up from 50 per cent in 2017. Overall 69 per cent of adults in the UK now use contactless payments, and no age group or region falls below 58 per cent usage.
Cash remains the second most frequently used payment method in the UK. It was used for 28 per cent of payments in 2018 and is forecast to still be used for one in ten payments in a decade’s time. However, the growth in contactless and mobile payments has meant consumers are choosing to pay less with cash, with overall cash payments falling by 16 per cent in 2018 and one in ten adults (5.4 million consumers) opting not to use cash at all. At the same time, many consumers value cash as a method of helping to manage their day-to-day finances, and this is expected to continue in future. UK Finance is working with the recently established Joint Authorities Cash Strategy Group (JACS) to help ensure cash continues to be available to those who need it.
Stephen Jones, Chief Executive of UK Finance, said “The same pick ‘n’ mix approach people now take when it comes to music, television or the news is expanding into payments, as consumers take advantage of new technologies to pay in a way that suits them.”
“More and more customers are now opting for the speed and convenience of paying with their contactless cards, or using mobile banking to check their balances and make transfers while on the move. This rapid rate of technological change is set to continue over the coming decade, as people embrace the ever-widening number of ways to pay and manage their finances, depending on their needs and lifestyle.”
“However, technology is not for everyone and cash remains a payment method that is valued and preferred by many, so maintaining access to cash will be vital to ensure no customer is left behind.”
“We are working with the Joint Authorities Cash Strategy Group (JACS) and wider stakeholders, to ensure all customers have a choice in how they pay for goods and services in future.”
Other key findings from the report include:
- In total 39.3 billion payments were made in the UK in 2018.
- 85 per cent of payments made by consumers were for spontaneous purchases, while 15 per cent were for regular bills and commitments.
- There were 3.2 billion payments using credit cards, an increase of four per cent compared to 2017.
- The number of cheques used to make payments fell by 15 per cent to 342 million, accounting for less than one per cent of payments in the UK.
- The volume of direct debit payments increased by three per cent to 4.4 billion
- The average number of payments made each month by the average adult was:
- 28 card payments, of which 11 were contactless
- 17 cash payments
- 6 Direct Debits
- 1.3 payments via online banking or mobile banking
- 0.8 standing orders
- 0.3 cheques
Commenting on the statistics Peter Janes, CEO and Founder, Shieldpay “Fraudsters will be rubbing their hands together with glee at the prospect of an increasingly cashless society. Money moving digitally, without adequate protections in place, means more chances for fraudsters to get their hands on people’s money. ”
“As banks further integrate themselves into our everyday lives and support the shift to a cashless society it’s paramount that greater protections are put in place. Levels of fraud are at all-time high but there are solutions already available that stops fraudsters in their tracks.”