Table of Contents
Overview
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- What you need to know
Executive Summary
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- The market
- Cash and card payments both grow, as contactless finally takes off
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- Figure 1: Monthly contactless card spend and average contactless card transaction value, March 2014-March 2017
- The payments market enters a new era of open innovation
- The consumer
- Cash is still the most commonly used payment method
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- Figure 2: Use of payment methods, aggregated, April 2017
- PayPal leads the way for awareness and use
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- Figure 3: Awareness and use of selected mobile payment schemes, April 2017
- Laptop and desktop computers dwarf smartphones for online purchases
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- Figure 4: Proportion who have made any online purchase, by age, April 2017
- Two-thirds say they typically use credit or debit card online
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- Figure 5: Online payment preferences, April 2017
- Apps are narrowly preferred to web browsers for payments
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- Figure 6: Mobile payment preferences, app versus browser, April 2017
- Security concerns and personal preferences hold smartphones back
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- Figure 7: Reasons for not using a smartphone for payments, April 2017
- Direct Debits are carefully managed to ensure they are convenient
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- Figure 8: Agreement with statements about Direct Debits, April 2017
- Payment acceptance continues to shape how people spend
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- Figure 9: Attitudes towards payment methods, April 2017
- What we think
Issues and Insights
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- Smartphone payments will struggle to overcome preference for other methods
- The facts
- The implications
- Request to Pay could find favour as an alternative to Direct Debits
- The facts
- The implications
The Market – What You Need to Know
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- Cash and card payments both grow, as contactless finally takes off
- The payments market enters a new era of open innovation
Market Context
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- Debit and credit cards show strong volume growth…
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- Figure 10: Total volume of point-of-sale and online retail card transactions, not seasonally adjusted, January 2014-March 2017
- … but value growth is more controlled
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- Figure 11: Total value of card spending, with online breakdown, not seasonally adjusted, January 2014 – March 2017
- Contactless card spending finally takes off in earnest…
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- Figure 12: Monthly contactless card spend and average contactless card transaction value, March 2014-March 2017
- … as contactless cards begin to become standard
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- Figure 13: Number of contactless cards issued and number of contactless transactions, March 2014 – March 2017
- Direct Debits are growing predictably
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- Figure 14: Bacs monthly volume and value of Direct Debits, January 2014-March 2017
- Cheque tech is unlikely to reverse the decline of cheques payments
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- Figure 15: Bacs monthly volume and value of Direct Debits, January 2014-March 2017
- Cash withdrawals have continued to rise
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- Figure 16: Annual value of cash withdrawals from LINK ATMs, 2014-16
Recent Developments in Payments
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- SEPA and PSD2 likely to stay put, despite Brexit
- Mastercard’s acquisition of Vocalink gets approval
- The ‘Open API’ era begins with Starling Bank release
- Samsung Pay launches in the UK
- Contactless ventures beyond cards and smartphones
- In China, Alipay and WeChat show the power of a broad user base
The Consumer – What You Need to Know
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- Cash is still the most commonly used payment method
- PayPal leads the way for awareness and use
- Laptop and desktop computers dwarf smartphones for online purchases
- Apps are narrowly preferred to browsers for mobile payments
- Security concerns and personal preferences hold smartphones back
- Direct Debits are carefully managed to ensure they are convenient
- Payment acceptance continues to shape how people spend
How Do People Pay?
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- Almost everyone still uses cash…
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- Figure 17: Use of payment methods, aggregated, April 2017
- … but cards are catching up
- Almost half of people are active contactless users
- Contactless smartphone payments have some way to go
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- Figure 18: Use of payment methods by time-scale, aggregated, April 2017
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- Figure 19: Use of payment methods, by time-scale April 2017
- The majority use a wide range of payment methods
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- Figure 20: Number of payment methods used in the last six months, April 2017
Awareness and Use of Payment Schemes
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- PayPal converts highest awareness into strongest use
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- Figure 21: PayPal UK ‘New Money’ tweet, 8 May, 2017
- Scope for growth among tech giants’ payment services
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- Figure 22: Awareness and use of selected mobile payment schemes, April 2017
- PayPal strikes a chord with older age groups
- Millennials are key market for retail payment schemes
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- Figure 23: Awareness of selected mobile payment schemes, by age, April 2017
- Apple Pay and Android Pay also rely on Millennial uptake
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- Figure 24: Use of selected mobile payment schemes, April 2017
Online Purchasing Behaviour
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- Smartphone purchases still dwarfed by home-based devices…
- … but transfers to friends and family show promise
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- Figure 25: Online purchasing behaviour, payment type by device, April 2017
- Younger people are comfortable operating across many devices…
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- Figure 26: Proportion who have made any online purchase, by age, April 2017
- … and more likely to use their mobile for bank transfers
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- Figure 27: Proportion who have made any online transfer, by age, April 2017
Online Payment Preferences
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- Debit card outweighs payment providers despite greater convenience
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- Figure 28: Online payment preferences, April 2017
- Payment providers appeal across the age spectrum
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- Figure 29: Online payment preferences, by age, April 2017
Mobile Payment Preferences
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- Apps are narrowly preferred to web browsers for payments
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- Figure 30: Mobile payment preferences, app versus browser, April 2017
- Older people are more likely to show indifference
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- Figure 31: Mobile payment preferences, app versus browser, by age, April 2017
Barriers to Smartphone Payments
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- People need convincing of the benefits of mobile payments
- Security also remains a barrier for a third of non-users
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- Figure 32: Reasons for not using a smartphone for payments, April 2017
- Figure 33: Number of reasons for not using a smartphone for payments, April 2017
- Security concerns highest among 35-44s
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- Figure 34: Reasons for not using a smartphone for payments, by age, April 2017
- Four out of five people with mobile security concerns still shop online
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- Figure 35: Reasons for not using a smartphone for payments, by online purchasing behaviour, April 2017
Attitudes towards Direct Debits
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- More than three quarters of people have at least one Direct Debit
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- Figure 36: Direct Debit Ownership, by age, April 2017
- People with no Direct Debits more likely to have been caught out in the past
- Online banking aids Direct Debit management
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- Figure 37: Agreement with statements about Direct Debits, April 2017
- 25-34s represent a key target market for Request to Pay
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- Figure 38: Attitudes towards Direct Debits, by age, April 2017
Attitudes towards Payment Methods
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- Payment acceptance continues to shape how people spend
- Appetite for higher value contactless transactions
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- Figure 39: Attitudes towards payment methods, April 2017
- 25-34s are pushing forward, but are irked by poor acceptance levels
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- Figure 40: Attitudes towards payment methods, by age, April 2017
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
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