UK Finance's Payments Market Findings 2022

UK Finance, an industry body for financial and banking sectors, has released their latest report on the state of payments and consumer behaviour — Payments Market Findings 2022 — and it contains plenty of interesting reading for small business owners up and down the land.

It's a hefty report but don't worry, we've gone through the entire thing and distilled the most important information for our SME professionals. Let's take a look at what you need to know...

What were the Payment Market findings?

The headlines show an accelerated rise in consumer adoption of contactless payments following the UK's covid-19 lockdowns, a fall in cash payments and — perhaps relatedly — a reduction in ATM use too.

Looking further ahead, UK Finance predicts these trends to continue into 2031, with card payments reaching 61% of all payments — totalling an estimated 19.4 billion transactions. A huge number whichever way you look at it.

The report also anticipates that the trend away from cash payments to contactless payments, mobile wallet channels, and online banking will continue, with this shift seen as being irreversible by many experts.

Debit card transactions account for the largest number of purchases in the UK, taking 48% of the pie — and when you include contactless payments in the mix (58% of consumer card payments), the number tops a staggering 13.1 billion transactions. 

The increased contactless cap of £100 per transaction undoubtedly helping the cause there. Alongside debit card payments, Faster Payments, BACS, CHAPS and other remote banking services are also expected to continue to enjoy increased adoption (already accounting for 3.6 billion payments), with Faster Payments overtaking BACS to become the most commonly used payment method by businesses.

Interestingly, for the first time the UK Finance report included figures for Buy Now Pay Later adoption, with 12% of survey respondents saying they'd used such a service in 2021.

On the flip side of all this, cash usage is predicted to decline sharply, with only 6% of payments expected to be made using cash by 2031.

In fact, across the board, there is a clear trend from consumers away from 'traditional' transaction methods — cheque payments are expected to account for just 0.2% of the market by the early '30s. In stark contrast, a UK Finance say a massive 93% of people will be using online banking.

This should signal to small businesses just how important it is to provide quick and simple card payments and online payments for the consumers of today and the future — 97% of all UK adults now hold a debit card.

Contactless payments are becoming increasingly popular, especially amongst younger generations — growing from just 3% of all payments in 2015 to 32% in 2021 — so it's important to make sure your business can cater to this demand.

In addition, as cash use continues to decline, offering alternative payment methods such as mobile payments will become even more important — and expected — from consumers.

So, what does all this mean for your small business?

Well, first of all, it’s important to note that the trend towards digital and contactless payments is only going to continue. In the future, cash is likely to play an increasingly smaller role in our lives, so it's important to be prepared for that.

The modern consumer wants, and indeed expects, to be able to checkout in an instant and by reducing friction, you're increasing the chance they'll return to shop with you. They say the first pound is the hardest to earn, well, by offering services like contactless payment, Apple, Samsung and Google Pay, and fast online checkout, you'll be doing your chances of increasing that lifetime value no harm whatsoever.

So, if you’re not already offering digital and contactless payment options to your customers, then now may be the time to start doing so. Not only will this make it easier for your customers to pay you, the up-to-date nature of digital bookkeeping means it'll also help you avoid potential cash-flow issues down the line.

Another thing to bear in mind is that, as the use of debit and credit cards continues to grow, so too does the risk of fraud. Obviously, it’s important to make sure you have robust security measures in place to protect your business from fraudsters. Of course, when you choose takepayments as your payment provider, you can rest assured that all our products come with the latest tech and features to help you avoid such headaches.

If you've got any pressing questions or simply want to chat over your options, our friendly team can be reached on 08082 397706 or you can drop us a message here.

See UK Finance's report here.

John Ford

Copywriter