Payments Landscape in the UK: Opportunities and Risks to 2022 (including Consumer Survey Insights)

Payments Landscape in the UK: Opportunities and Risks to 2022 (including Consumer Survey Insights)


The UK payments market is highly mature - arguably even overserved by its financial institutions. There were more debit cards in circulation than individuals in the UK in 2018 by a considerable margin. Access to formal financial services in the UK is easy and mostly free, leading to a population that is highly comfortable with credit and debit cards both in-store and online. However, there are some notable areas of weakness in the market - the mobile proximity payments market in particular is still underdeveloped, and UK consumers still prefer cash to a certain extent. Finally, the Brexit referendum result leaves the future of the UK payment market - in terms of economic strength as well as regulatory change - unclear.

Rising pressure on profitability and the growing consumer preference for online banking are driving the concept of digital-only banks in the UK. Atom Bank was the first such bank, and this business model is also used by the likes of Starling Bank, Monzo, and Fidor Bank. In September 2018, Goldman Sachs’ digital bank Marcus was launched in the UK, followed by Germany-based digital bank N26 in October, allowing customers to carry out all banking tasks 24/7 from any location.

Contactless payments are growing in popularity due to retailers’ extensive deployment of contactless point of sale (POS) terminals, coupled with backing from the big banks and consumer enthusiasm for the convenience of contactless. According to UK Finance there were 118.9 million contactless cards in circulation in the country as of December 2017, up from 58.7 million cards in 2014. The number of contactless payments made in the UK increased by 97% during 2017 to 5.6 billion payments.

Debit and credit cards together account for nearly 49% of all online spending. PayPal, which is the third most popular online tool, is also mainly funded by payment cards. The convenience of credit cards and the security of PayPal are important factors for UK consumers making online purchases. The e-commerce market registered robust growth, increasing from £103.4bn ($131.9bn) in 2014 to £166.4bn ($212.3bn) in 2018, driven by growing internet and smartphone penetration. Online shopping events such as Black Friday and Cyber Monday helped boost e-commerce sales.

The report Payments Landscape in the UK: Opportunities and Risks to 2022 (including Consumer Survey Insights), provides detailed analysis of market trends in the UK cards and payments industry. It provides values and volumes for a number of key performance indicators in the industry, including cash, cards, credit transfers, direct debits, and cheques during the review-period (2014-18e). The report also analyzes various payment card markets operating in the industry and provides detailed information on the number of cards in circulation, transaction values and volumes during the review-period and over the forecast-period (2018e-22f). It also offers information on the country's competitive landscape, including market shares of issuers and schemes. The report brings together research, modeling, and analysis expertise to allow banks and card issuers to identify segment dynamics and competitive advantages. The report also covers detailed regulatory policies and recent changes in regulatory structure.

The report provides -

  • Current and forecast values for each market in the UK cards and payments industry, including debit, credit, and charge cards
  • Detailed insights into payment instruments including cash, cards, credit transfers, direct debits, and cheques. It also, includes an overview of the country's key alternative payment instruments
  • E-commerce market analysis
  • Analysis of various market drivers and regulations governing the UK cards and payments industry
  • Detailed analysis of strategies adopted by banks and other institutions to market debit, credit, and charge cards
Companies mentioned: Lloyds Banking Group, Barclays, Royal Bank of Scotland, HSBC, Santander UK, Tesco Bank, NatWest, Nationwide, Capital One, Mastercard, Visa, American Express, Diners Club, Worldpay, Barclaycard, Global Payments, Cardnet, Elavon and First Data

  • To enhance competition and innovation in the payment and banking spectrum, the open banking service was rolled out by the Open Banking Implementation Entity (OBIE) in January 2018. The service allows banks’ customers to give other companies permission to securely access their accounts. Customers can also access a range of services from different types of companies regulated by the Financial Conduct Authority (FCA) or any other European regulator. The service covers personal and business current accounts, credit cards, and online e-money accounts. OBIE is an entity created by the UK’s nine largest personal and small business current account providers: Barclays, Lloyds Banking Group, Santander, Danske Bank, HSBC, RBS, Bank of Ireland, Nationwide, and AIB Group. Currently, 25 banks and building societies offer open banking.
  • Contactless payments are increasingly being implemented within the country’s transport system. Most recently, in December 2018 Stagecoach - Britain’s biggest bus operator - announced it would accept contactless payments on all of its vehicles. The Stagecoach scheme is the single largest contactless merchant in Europe after Transport for London (TfL). Millions of Stagecoach passengers now have access to contactless bus travel after the company completed the rollout of the technology, which covers 7,400 vehicles operating in England, Scotland, and Wales. Passengers can now pay for their travel with a contactless credit or debit card, as well as Apple Pay and Google Pay.
  • To further enhance the use of payment cards, in July 2017 the UK government announced the removal of surcharges on card payments effective from January 13, 2018. Surcharges were commonly levied by merchants in the UK to compensate for merchant service fees. Generally, a surcharge of 2-3% was added to transactions made using payment cards. The removal of surcharges has encouraged consumers to shop more with payment cards, thus driving the volume and value of payment cards.
Reasons to buy
  • Make strategic business decisions, using top-level historic and forecast market data, related to the UK cards and payments industry and each market within it.
  • Understand the key market trends and growth opportunities in the UK cards and payments industry.
  • Assess the competitive dynamics in the UK cards and payments industry.
  • Gain insights into marketing strategies used for various card types in the UK.
  • Gain insights into key regulations governing the UK cards and payments industry.

Market Overview
Card-based Payments
Merchant Acquiring
E-commerce Payments
Mobile Proximity Payments
P2P Payments
Bill Payments
Alternative Payments
Payment Innovations
Payments Infrastructure & Regulation

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