UK Finance has release its latest Payment Markets Report, produced in collaboration with Accenture, which shows payments trends for the UK in 2023 and gives forecast projections for the next decade.
Key figures for 2023
The total number of payments made in the UK increased by five per cent to 48.1 billion
Almost four out of ten (38%) of all payments made in the UK during 2023 were contactless
One third of UK adults were using mobile contactless payments at least once a month
The number of cash payments fell to six billion, with cash representing 12% of all payments made in the UK
Faster Payments overtook Direct Debit to become the third most used payment type in the UK in 2023
In 2023 the total number of payments made in the UK was 48.1 billion, up from 45.7 billion in 2022.
Consumers made 85% of the total number of payments (41.0 billion payments) with businesses (commercial firms, government, and not-for-profit organisations) making the other 15% (7.1 billion payments).
The following chart shows payment volumes across different payment methods from 2013 to 2023.
Spending data over recent years suggests that there has been a shift towards consumers making a greater number of transactions that are each worth a lower individual amount, albeit without necessarily increasing the overall amount spent.
Anecdotal evidence suggests that this trend is caused by increased numbers of shopping trips, the transition to hybrid working, the use of multiple bank accounts, and the increased use of Buy Now Pay Later (BNPL) services.
Credit and Debit Cards
Debit cards remain the most popular payment method, accounting for 51% of all payments made in 2023. They are the most used payment method amongst UK consumers across all age groups.
Card volume increases were driven by several factors, with much of the trend towards an increased number of lower value payments being focussed on consumer retail card spending. Beyond this, migration from cash towards cards continues, as does the trend of small businesses increasingly accepting card payments.
On the credit card side in particular, deferred expenditure following the pandemic may still have been affecting spending during 2023, with people spending on summer holidays, home renovations or other big-ticket items that they did not purchase during lockdowns.
Contactless and mobile contactless payments
Usage of contactless and mobile contactless payments continued to increase.
During 2023, there were 18.3 billion contactless payments made in the UK, an increase of seven per cent (2022: 17.0 billion). In total, contactless payments represented 38% of all payments made in the UK.
This covers both the use of physical cards and cards loaded onto mobile phones or other devices, such as watches, which are then used to initiate contactless payments.
Looking specifically at mobile contactless payments, there was a marked increase in the number of people who reported being registered for mobile contactless payments (e.g. Apple Pay or Google Pay): now 42% of the adult population, up from 30% in 2022.
In terms of usage, one third (34%) of adults used mobile contactless payments at least once a month in 2023.
Mobile contactless payments benefit from additional security features, such as biometric authorisation of individual payments, and do not have upper value limits on the amount of an individual payment (currently £100 for contactless payments made using a physical card).
Given that mobile phone penetration is above 90% in the UK, there is room for mobile contactless payments to continue to increase in usage, although we expect that this is mainly likely to be reflected in a migration of payments from contactless cards to mobile contactless devices.
Cash
The volume of cash payments made in the UK during 2023 fell by seven per cent to six billion payments (2022: 6.4 billion). The number of cash payments rose during 2022 for the first time in a decade but has now fallen back to roughly where it was in 2021.
Cash accounted for 12% of all payments made in the UK during 2023, down from 14% in 2022.
Almost four out of ten UK adults (39%) were living largely cashless lives during 2023. However, the number of people mainly using cash in 2023 rose to 2.6% of the population. This represented an increase from 1.7% in 2022.
Overall cash remains the second most frequently used payment method in the UK, although that varies slightly by age.
Remote Banking
Remote banking (online, mobile, or telephone) remained popular in 2023, with 87% of adults using at least one form of remote banking last year.
Mobile banking use increased from 53% to 60%, while online banking (via a computer) fell from 65% to 62%. This reflects the fact that some people are
now conducting all of their banking via their mobile device, without the need to visit the full website of their account provider.
If the current trends continue, mobile banking is likely to become the most used remote banking service in the coming years.
Forecasts to 2033
Over the next decade, debit card payment volumes are forecast to continue to increase.
This growth will be driven by the continuing rise of contactless payments, the ongoing growth of online shopping and ever-increasing levels of card acceptance amongst businesses of all sizes. It is forecast that over 31 billion payments will be made using debit cards in 2033.
The number of cash payments is expected to continue the long-run declining trend seen in recent years, as consumers continue to turn to alternative payment methods.
However, the rate of decline is expected to slow as use becomes concentrated amongst people who have a strong preference for cash. We forecast that there will be around 3.4 billion cash payments made in the UK in 2033, accounting for around 6% of all payments.
“There is a huge amount of choice available to consumers in terms of how they make payments, but we can definitely see the continued popularity of debit cards and contactless,” explains Adrian Buckle, Head of Research at UK Finance.
“This has been driven both by consumer demand as well as new technologies which help to increase acceptance levels, particularly among small and mobile businesses.
Mobile contactless payments are growing fast and one third of adults are now making these at least once a month, with scope for usage to increase further.
This doesn’t mean we are on our way to becoming a cashless society. Cash is still the second most frequently used method of payment in the UK, although on the whole we are using it less and more people are leading largely cashless lives.
Over the next decade we forecast that the long run trend of a decline in cash use and growth of certain other payment methods such as cards and Faster Payments, will continue. We also expect to see further developments in the payments landscape that improve the customer experience.”
For more data on the UK payments market CLICK HERE
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