Table of Contents
Executive Summary
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- The market
- Debit cards make up the largest share of payments
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- Figure 1: Payment volumes (billions), 2014-18
- Figures from the FLA show growth in retail credit slowing
- Contactless payments jump 31%
- Number of ATMS lowest since 2005
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- Figure 2: Number of ATMs in the LINK network, 1998-2019
- Independent Access to Cash report makes waves
- Companies and brands
- Shop now, pay later bursts onto the scene
- Retailers make payments a point of difference
- NatWest launches the biometric payment fob
- Apple Pay introduces Express mode
- The consumer
- Cash continues to be used by 84% of people
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- Figure 3: Payment methods used in the last three months, November 2019
- PayPal is the most popular smartphone payment method
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- Figure 4: Smartphone payment methods used in the last three months, November 2019
- Debit cards and cash are preferred for smaller purchases
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- Figure 5: Preferred method to payment in-store, November 2019
- Speed drives payment choice for low-value purchases
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- Figure 6: Important factors in deciding how to pay for everyday purchases, November 2019
- …but protection takes precedence for higher value purchases
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- Figure 7: Important factors in deciding how to pay for higher value purchases, November 2019
- Almost two thirds regularly carry cash
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- Figure 8: Frequency of carrying cash, November 2019
- Consumers have faith in fingerprint authentication
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- Figure 9: Interest in payment innovations, November 2019
- Setting up new online accounts is a hassle
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- Figure 10: Payment behaviours, November 2019
- Three quarters think there will always be a need for cash
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- Figure 11: Attitudes towards payment Methods, November 2019
- What we think
Issues and Insights
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- Payments are becoming a key battleground for retailers
- The facts
- The implications
- A cardless future may come sooner than cashless one
- The facts
- The implications
The Market – What You Need to Know
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- Debit cards make up the largest share of payments
- Figures from the FLA show growth in retail credit slowing
- Contactless payments jump 31%
- Number of ATMS lowest since 2005
- Independent Access to Cash report makes waves
Methods of Payment
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- Debit cards transaction exceed cash for the first time
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- Figure 12: Payment volumes (billions), 2014-2018
- Credit card lending increases, but at a slower rate
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- Figure 13: total sterling credit card gross lending to individuals, 2010-19
- Repayments outstrip new credit card lending
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- Figure 14: Monthly change in total outstanding net credit card debt compared to the previous year, 2016-19
- Figures from the FLA show growth in retail credit slowing
- Value of cash in circulation stalls
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- Figure 15: Monthly average amount outstanding of total sterling notes and coin in circulation, March 2010-December 2019
The Market Environment
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- Contactless payments grow rapidly
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- Figure 16: Volume of contactless payments, 2014-18
- Online accounts for almost a fifth of total retail sales
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- Figure 17: Internet sales as a % of total retail sales (excluding fuel), 2010-19
- Laptops are the preferred option for online shopping
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- Figure 18: Devices used to make purchases online in the last 3 months, October 2019
- Decline in value of ATM withdrawals accelerates
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- Figure 19: Value of withdrawals from ATMs in the LINK network, January 2016-December 2019
- Number of ATMS lowest since 2005
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- Figure 20: Number of ATMs in the LINK network, 1998-2019
Regulatory and Legislative Changes
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- SCA introduction delayed
- New rules to tackle persistent debt
- Independent Access to Cash Report makes waves
- Gambling Commission bans using credit cards to place bets
Companies and Brands – What You Need to Know
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- Shop now, pay later bursts onto the scene
- Retailers make payments a point of difference
- NatWest launches the biometric payment fob
- Apple Pay introduces Express mode
Competitive Strategies – Payments
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- Shop now, pay later bursts onto the scene
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- Figure 21: Relative Google search interest of Klarna, Clearpay and LayBuy, January 2019 - February 2020
- Klarna
- Clearpay
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- Figure 22: ASOS payment options, December 2019
- LayBuy
- Where next?
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- Figure 23: Klarna payment options move in-store, December 2019
- Credit cards become more flexible to compete
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- Figure 24: The tymit credit card, December 2019
- Growing demands for access to cash to be protected
- Visa and Mastercard move to incentivise retailers to offer cashback
- Banks enhance access to cash for businesses
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- Figure 25: MCash by Metro Bank, December 2019
- LINK launches ‘Request an ATM’ initiative
- Backlash against cashless emerges in the US
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- Figure 26: Amazon PayCode, February 2020
Competitive Strategies - Retailers
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- Dixons Carphone puts credit at the heart of its offer
- Faster credit decisions streamline the shopping experience
- …and reward loyal customers
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- Figure 27: H&M payment options for members, January 2020
- Grocers make tentative movements towards a cashierless world
- …but not everyone is ready
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- Figure 28: Attitudes towards using self-scan technology in c-stores, by age, March 2019
Launch Activity and Innovation
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- Enhancing and streamlining security
- NatWest tests biometric payment fob
- Amazon developing pay by palm technology
- Alipay uses ‘Beautifying filters’ to encourage use of ‘pay by smile’
- Enabling wider adoption of digital payments
- Visa and Samsung develop tap-to-phone technology
- Nationwide trials contactless posters
- Big Issue sellers accept contactless payments
- Speeding up the payment process
- ExxonMobil creates gas pumps for Alexa-enable cars
- ApplePay introduces Apple Express to speed up payments
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- Figure 29: Apple Express mode for use on Transport for London, December 2019
- Zalando separates payments from the checkout process
- Using payments to enhance loyalty
- MasterCard launches AR benefits app
- Nectar launches trial to use Open Banking to deliver more personalised offers
The Consumer – What You Need to Know
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- 84% are recent users of cash
- PayPal is the most popular smartphone payment method
- Debit cards and cash are preferred for smaller purchases
- Speed drives payment choice for low value purchases
- Almost two thirds regularly carry cash
- Consumers want speed, but not at the price of security
- Setting up new online accounts is a hassle
- Three quarters think there will always be a need for cash
Payment Methods Used
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- Cash continues to be the most widely used
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- Figure 30: Payment methods used in the last three months, November 2019
- Young people move away from credit cards
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- Figure 31: Payment methods used in the last 3 months, by age and socio-economic group, October 2019
- Consumers adopt a mix-and-match approach to payments
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- Figure 32: Repertoire analysis of payment methods used in the last 3 months, by payment methods used November 2019
Payments by Smart Device
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- PayPal is the most popular smartphone payment method
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- Figure 33: Smartphone payment methods used in the last three months, November 2019
Payment Preferences
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- Debit cards and cash are preferred for smaller purchases
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- Figure 34: Payment preferences, by type of purchase, November 2019
- Credit card use increases with age
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- Figure 35: Preferred payment options for online purchases under £30, by age group, October 2019
- 18-24 year olds snub cards to get credit for larger purchases
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- Figure 36: 18-24 year olds’ payment preferences when shopping online, October 2019
- Contrasting attitudes towards cash across the country
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- Figure 37: Preferred payment method for in-store purchases under £30, by region, October 2019
Important Factors in Deciding How to Pay
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- Speed of checkout is most important for low-value purchases
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- Figure 38: Important factors in deciding how to pay for everyday purchases, November 2019
- But protection takes precedence for larger purchases
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- Figure 39: Important factors in deciding how to pay for higher value purchases, November 2019
Frequency of Carrying Cash
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- Almost two thirds regularly carry cash
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- Figure 40: Frequency of carrying cash, November 2019
- Cash carriers rely on more traditional forms of payment
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- Figure 41: Difference in payment methods used in the last 3 months between those who carry cash all or most of the time and everyone else, November 2019
- Half of under-35s still carry cash most of the time
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- Figure 42: Carry cash all or most of the time, by age group, November 2019
Attitudes Towards Payment Innovations
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- Built-in fingerprint technology holds appeal
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- Figure 43: Interest in payment innovations, November 2019
- Delayed charging holds greatest appeal to 25-34 year olds
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- Figure 44: Interest in payment innovations, November 2019
Payment Behaviours
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- Consumers want speed, but not if it means less security
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- Figure 45: Payment behaviours, November 2019
- Different attitudes towards sharing and saving data
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- Figure 46: Attitudes toward sharing and saving data, by age and gender, October 2019
Attitudes Towards Payment Methods
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- Guest checkout vs setting up an account
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- Figure 47: Attitudes towards payment methods, November 2019
- New payment technologies are making it too easy to spend
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- Figure 48: “New payment technologies make it too easy to spend money”, by age and gender, November 2019
Attitudes Towards Cash
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- Majority of all age groups think cash will persist
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- Figure 49: “There will always be a need for cash”, by age group, November 2019
- People in the North of England are most attached to cash
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- Figure 50: “There will always be a need for cash”, by region, November 2019
- A continued reliance on ATMs
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- Figure 51: Ways of accessing cash, by age group, November 2019
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
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