Latest data from finance industry body reveals the way the payments market is bouncing back following the pandemic
- Caroline Donnelly,Datacentre Editor
Published: 18 Aug 2022 12: 42
Consumer and business payment habits have returned with their pre-pandemic patterns, by using cash continuing to decline, as the usage of debit cards and contactless payment methods increases.
That’s in accordance with UK Finances UK payment markets 2022 report, which documents the changes in how consumers covered goods and services in 2021 and confirmed a total of 40.4 billion payments occurred in the united kingdom this past year.
The report said the Covid-19 pandemic had a transformative effect on the payments market by accelerating the continued decline in the usage of cash payments, as the usage of debit cards also slumped after years of rising usage.
The pandemic not merely led to a decrease in the total amount of payments manufactured in the UK in addition, it resulted in changes in the forms of payment which were used, said the report summary document. People made greater usage of contactless payments, online banking and mobile wallet channels, largely at the trouble of cash payments.
This resulted in the question of whether these observed changes in payment patterns reflected permanent changes to peoples behaviour, or whether peoples payment preferences would go back to pre-pandemic patterns as lockdown restrictions were eased.
And, in line with the finance industry bodysdata, it appears consumers have fallen back to their old payment habits, with debit and charge card use rebounding in 2021 weighed against 2020.
Both debit card and charge card payments, which had declined in 2020, rose once more in 2021, said the report. Further, the share of payments made using card, which had risen to 52% of most payments during 2020, continued to improve in 2021, with 57% of most payments in the united kingdom being made using cards in 2021.
Contactless payments stayed popular, with almost a third (32%) of most payments manufactured in the united kingdom during 2021 being made using contactless.
In regards to cash, its use as a payment method declined again during 2021, however the slump was smaller than in 2020.
UK Finances data demonstrates cash remains the next most regularly used payment method in the united kingdom, accounting for 15% of most payments in 2021. However, the total amount of cash payments manufactured in 2021 was down 1.7% on the prior year.
The long-run trend in cash payments in the last decade has been of an ongoing decline, with payments transitioning specifically to debit cards, it said. In 2020, the pandemic led to cash use falling by 35% when compared to previous year.
Since 2017, cash use have been declining by around 15% every year, so 2020 represented an acceleration of the decline. In 2021, it seems there was a decrease in the rate of the decline in cash use.
A lot of this is to be likely many elements of the economy with traditionally high degrees of cash usage were closed or heavily restricted during lockdown, and in those elements of the economy that remained open, many retailers encouraged the usage of contactless payment options, amid fears about cash being truly a vector for Covid-19 transmission.
Looking ahead, the report predicted that the usage of debit cards to create payments will continue steadily to increase on the next decade, and with time will pass the threshold (24 billion) accounting for over fifty percent of most payments manufactured in the united kingdom.
This growth will undoubtedly be driven by the continuing rise of contactless payments, the ongoing growth of online shopping and ever-increasing degrees of card acceptance among businesses of most sizes, but particularly among smaller businesses, it said.
Read more onto it for financial services
8 top digital wallet companies
Value of contactless transactions doubles in 2 yrs
Barclaycard customers increase contactless spending following limit rise
Brighton tourists charged a lot of money for fairground ride after Worldpay glitch