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Consumer Payment Preferences - UK - June 2017

Published By :

Mintel

Published Date : Jul 2017

Category :

Cards & Payments

No. of Pages : N/A

The payments space is constantly changing, but payment preferences are much slower to adjust. Contactless has finally taken off to an extent, with growth now limited primarily by the willingness of retailers to accept it. Preferences for traditional payment methods, as well as concerns about security, are currently holding smartphone payments back.

Table of Content

OVERVIEW
What you need to know

EXECUTIVE SUMMARY
The market
Cash and card payments both grow, as contactless finally takes off
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
Figure 2: Use of payment methods, aggregated, April 2017
PayPal leads the way for awareness and use
Figure 3: Awareness and use of selected mobile payment schemes, April 2017
Laptop and desktop computers dwarf smartphones for online purchases
Figure 4: Proportion who have made any online purchase, by age, April 2017
Two-thirds say they typically use credit or debit card online
Figure 5: Online payment preferences, April 2017
Apps are narrowly preferred to web browsers for payments
Figure 6: Mobile payment preferences, app versus browser, April 2017
Security concerns and personal preferences hold smartphones back
Figure 7: Reasons for not using a smartphone for payments, April 2017
Direct Debits are carefully managed to ensure they are convenient
Figure 8: Agreement with statements about Direct Debits, April 2017
Payment acceptance continues to shape how people spend
Figure 9: Attitudes towards payment methods, April 2017
What we think

ISSUES AND INSIGHTS
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
Cash and card payments both grow, as contactless finally takes off
The payments market enters a new era of open innovation

MARKET CONTEXT
Debit and credit cards show strong volume growth…
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
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…
Figure 12: Monthly contactless card spend and average contactless card transaction value, March 2014-March 2017
… as contactless cards begin to become standard
Figure 13: Number of contactless cards issued and number of contactless transactions, March 2014 – March 2017
Direct Debits are growing predictably
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
Figure 15: Bacs monthly volume and value of Direct Debits, January 2014-March 2017
Cash withdrawals have continued to rise
Figure 16: Annual value of cash withdrawals from LINK ATMs, 2014-16

RECENT DEVELOPMENTS IN PAYMENTS
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
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?
Almost everyone still uses cash…
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
Figure 18: Use of payment methods by time-scale, aggregated, April 2017
Figure 19: Use of payment methods, by time-scale April 2017
The majority use a wide range of payment methods
Figure 20: Number of payment methods used in the last six months, April 2017

AWARENESS AND USE OF PAYMENT SCHEMES
PayPal converts highest awareness into strongest use
Figure 21: PayPal UK ‘New Money’ tweet, 8 May, 2017
Scope for growth among tech giants’ payment services
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
Figure 23: Awareness of selected mobile payment schemes, by age, April 2017
Apple Pay and Android Pay also rely on Millennial uptake
Figure 24: Use of selected mobile payment schemes, April 2017

ONLINE PURCHASING BEHAVIOUR
Smartphone purchases still dwarfed by home-based devices…
… but transfers to friends and family show promise
Figure 25: Online purchasing behaviour, payment type by device, April 2017
Younger people are comfortable operating across many devices…
Figure 26: Proportion who have made any online purchase, by age, April 2017
… and more likely to use their mobile for bank transfers
Figure 27: Proportion who have made any online transfer, by age, April 2017

ONLINE PAYMENT PREFERENCES
Debit card outweighs payment providers despite greater convenience
Figure 28: Online payment preferences, April 2017
Payment providers appeal across the age spectrum
Figure 29: Online payment preferences, by age, April 2017

MOBILE PAYMENT PREFERENCES
Apps are narrowly preferred to web browsers for payments
Figure 30: Mobile payment preferences, app versus browser, April 2017
Older people are more likely to show indifference
Figure 31: Mobile payment preferences, app versus browser, by age, April 2017

BARRIERS TO SMARTPHONE PAYMENTS
People need convincing of the benefits of mobile payments
Security also remains a barrier for a third of non-users
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
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
Figure 35: Reasons for not using a smartphone for payments, by online purchasing behaviour, April 2017

ATTITUDES TOWARDS DIRECT DEBITS
More than three quarters of people have at least one Direct Debit
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
Figure 37: Agreement with statements about Direct Debits, April 2017
25-34s represent a key target market for Request to Pay
Figure 38: Attitudes towards Direct Debits, by age, April 2017

ATTITUDES TOWARDS PAYMENT METHODS
Payment acceptance continues to shape how people spend
Appetite for higher value contactless transactions
Figure 39: Attitudes towards payment methods, April 2017
25-34s are pushing forward, but are irked by poor acceptance levels
Figure 40: Attitudes towards payment methods, by age, April 2017

APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology

List of Table

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