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Consumer Payment Preferences - UK - October 2015

Published By :

Mintel

Published Date : Oct 2015

Category :

Banking

No. of Pages : N/A

The payments market defies all typical negative stereotypes of the financial services sector. It is dynamic, fast paced and innovative with multiple players competing to solve the payments challenges of both today and tomorrow. This is creating an environment that is both exciting and potentially hugely beneficial to both providers and consumers, and challenging as regulation and security measures try to keep up with the rapid pace of change.

Table of Content

Overview

Abbreviations

Executive Summary

The market
Cashless payments are on the rise
Developments are concentrated on mobile…
but it is not just out with the old and in with the new….
and we are long way from becoming a completely digital economy
The consumer
Awareness and usage of alternative payment methods is mixed
Figure 1: Awareness and usage of alternative payment methods, July 2015
For consumers, choice is the best option
Figure 2: Consumer use of payment methods within the last six months, July 2015
Security concerns are less of a barrier than in the past
Figure 3: Consumer security rankings of different payment methods, July 2015
Incumbents and new entrants need to collaborate
Figure 4: Consumer payment app expectations, July 2015
Mobile payments are the next frontier
Figure 5: Attitudes towards payment methods, July 2015
What we think

Issues and Insights

Incumbents and new entrants need to collaborate to innovate
The facts
The implications
For consumers, choice is what matters
The facts
The implications
The need to overcome the security barrier
The facts
The implications

The Market – What You Need to Know

Cashless payments are on the rise
Developments are concentrated on mobile…
but it is not just out with the old and in with the new
A fully digital economy remains a long way off

Recent Developments in Payments

Cashless payments on the rise
Mobile phones are the next payments frontier
Phone as contactless
Payment apps
Incumbents fight to stay relevant
Barclays leads the way…
but others are not far behind
Payments get social
Rethinking the traditional
Cheques get a digital makeover
Monese helps the traditionally unbanked participate in payments
Fidor lands in the UK
Payments get superpowers
The disruptive potential of blockchain
Going beyond payments
Squirrel
xWare42
Ravelin

Regulatory Development in Payments

The role of regulation in innovation
Recent regulatory developments
EU caps card fees
Credit card market under review
Creating a European payments market

The Consumer – What You Need to Know

Awareness and usage of alternative payment methods is mixed
Progress provides choice
Security concerns remain rife
Mobile payments are the next frontier
Incumbents and new entrants need to collaborate

Awareness and Use of Alternative Payment Methods

The power of brand aids awareness
Figure 6: Consumer awareness of alternative payment methods, July 2015
Awareness is split by gender
Generation X are most engaged
Figure 7: Awareness of alternative payment methods, by generation, July 2015
Adoption rate is slow
Figure 8: Use of alternative payment methods, July 2015

Use of Payment Methods

Over a third have used a contactless card within the last six months
Figure 9: Consumer use of payment methods within the last six months, July 2015
New technologies needed to relaunch cheques
Figure 10: Consumer use of payment methods, July 2015
For consumers, choice is the best option
Figure 11: Number of payment methods used within the last six months, July 2015
Mobile wallets could help navigate the payments minefield

Security Concerns

Consumers reassured by chip and PIN
Figure 12: Consumer security rankings of different payment methods, July 2015
Experience of contactless cards does little to allay concerns
Figure 13: Most highly rated payment method in terms of security, by those who have used a contactless card in the last six months, July 2015
Time and biometrics could tip the balance

Mobile Payment Apps

Banks are expected to produce ‘best’ mobile payment apps
Figure 14: Consumer payment app expectations, July 2015
Younger consumers put their faith in tech companies
Figure 15: Consumer expectations of a payment app produced by a tech company, by age, July 2015

Attitudes towards Cash

Consumers rely on cash for security and budgeting purposes
Figure 16: Consumer attitudes towards cash, July 2015
Age and income divide opinion

Barriers to Uptake of Payments Innovation

Majority of consumers see no need to change the way we pay
Figure 17: Consumer attitudes towards factors affecting uptake of new payment methods, July 2015
Concerns over security and acceptance remain major barriers
These concerns slow the rate of adoption, but don’t prevent progress
Figure 18: Payment methods used within the last six months, by agreement with statements about payment methods, July 2015

Factors Influencing Choice of Payment Method

Convenience is most important factor for consumers
Figure 19: Consumer attitudes towards factors influencing their choice of payment method, July 2015
Contactless debit cards could become payment method of choice
Figure 20: Payment methods used within the last six months, by agreement with the statement “When making a purchase I use whichever payment method is the most convenient at the time”, July 2015
Reward-driven consumers
Figure 21: Consumer payment preferences – CHAID – Tree output, July 2015

Consumer Interest in Smartphone Payments

Majority uninterested in using smartphone to pay…
Figure 22: Attitudes towards smartphone payments, July 2015
but this could change over time
Figure 23: Agreement with the statement “I’d like to be able to use a smartphone to pay for purchases in shops, restaurants and other high street stores”, by age, July 2015

Appendix

CHAID Analysis Methodology

List of Table

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