The journey towards becoming a cashless society has been underway for quite some time in the UK. The British have long been comfortable paying electronically. In light of the pandemic, and the risk of spreading the virus via notes and coins, the move towards electronic payments has accelerated dramatically. In fact, in March 2020, when the first lockdown went into effect, the usage of cash decreased by 50% in just a matter of days. As electronic payment methods become an increasingly integral part of British society, we will look at the top payment methods in the UK now and in the future.
The British love to shop online. In fact, the UK’s e-commerce sector dwarfs that of countries in the EU. The consumer-facing e-commerce market in the UK is valued at $233 billion – vastly overshadowing Germany’s, which stands at $82 billion. 87% of Brits shopped online in the year leading up to the pandemic, which was the highest in Europe after Switzerland, where 88% of citizens shopped online during the same period. Post pandemic, these numbers have only increased, as even more people have gone online to shop while isolating in their homes. Brits are also comfortable shopping using their smartphones, with 55% of online shopping in the nation taking place over a mobile device. All of the major retailers offer mobile applications, making the shopping process seamless.
Payment Methods Online and Offline
Cards are by far Britain’s favorite payment method. Back in 2017, debit cards overtook cash as the nation’s most used payment method. With the advent of contactless payments and the pandemic, cards have become even more ubiquitous.
PayPal is the market leader in the UK when it comes to digital wallets. Thanks to its history with eBay, it has a well-established footprint on the market. Newer, innovative fintech companies are now starting to erode PayPal’s dominance, and, thanks to the rise in crypto, the sector is developing fast.
Bank transfers make up a tiny portion of the UK payment market compared to many European countries; they currently make up around 3% of payments. The UK has a strong banking infrastructure, and bank transfers are processed almost in real-time, so there is room for development here.
As we already mentioned above, the pandemic has pushed cash down the pecking order as a payment method. According to the Guardian, by 2024, only 7% of in-store payments will be made using cash. When it comes to online orders, cash on delivery already makes up just 1% of payments made. Many high street stores actually stopped allowing cash payments altogether in light of the pandemic, which may have caused exclusion for those on lower incomes and the unbanked.
The United Kingdom has a highly developed economy and a robust banking infrastructure. The British are quick to adopt new technologies and have been willing to lead the pack when it comes to digital payments. The move towards a cashless society, accelerated by the pandemic, means there is still room for development in the payment industry, with scope for electronic wallets and convenient peer-to-peer transfers, as the few payments still made in cash go electronic. Inclusive and accessible technology is vital so as not to leave behind those without traditional bank accounts.