Card Is King in UK Payments Landscape, but Digital Wallet Usage Soars

UK Finance, a trade body representing the United Kingdom’s banking and financial services sector, recently published the latest edition of its annual report assessing the state of the country’s payments market.

According to the report, a total of 40.4 billion payments were made in the U.K. in 2021, representing a return to pre-pandemic payment volumes from the 2020 fall experienced nationwide due to lockdowns.

Overall, debit card payments remained the U.K.’s preferred payment method, and after a decline in 2020, payment volumes rebounded in 2021 to hit a total of 19.5 billion, the equivalent of almost half (48%) of all payments made in the country last year.

And if current trends continue, the report projects that debit card payments would exceed 24 billion payments by 2031.

Overall, card payments in the U.K., including credit cards, made up 57% of all payments last year, the report found. In fact, 97% of British adults owned a debit card while 66% owned a credit card.

The latest data reinforces the finding of PYMNTS’ own investigation into the U.K.’s spending preferences, which found that card payments accounted for nearly 60% of all in-store transactions.

Read more: UK Leads Europe in Internet Access, Second in CE Index, Study Finds

Contactless and Mobile Wallets

In 2021, the growth of contactless payments also outpaced the growth of card payments in general, increasing by 36% from 2020.

The UK Finance report puts this growth down to several factors. These include an increase in the contactless limit in 2021 from £45 to £100; the continued rollout of card acceptance devices among smaller businesses; retailers continuing to pursue contactless-first policies that were implemented as a protective measure against the spread of COVID-19; growing consumer trust in the technology; and the increased popularity of contactless mobile wallets.

These findings mirror comments made by Pete Wickes, general manager, EMEA at WorldPay, in a recent interview with PYMNTS.

As a key infrastructural player in the U.K.’s payments ecosystem, WorldPay was involved in high-level talks on the contactless-limit raise and has witnessed evolving consumer preferences firsthand, Wickes explained.

Watch the interview: Real-Time Demand Will Boost EU Open Banking Payments, Says Worldpay EMEA GM

On the growing usage of mobile wallets, Wickes said that “[with] all the metrics that we see about mobile wallet growth, it feels like to me there’s been an acceptance from all demographics that this is the way forward.”

Wickes’ observation is backed up by the recent PYMNTS data which reveals that although the highest mobile wallet penetration is observed in the 16-24 age, UK Finance expects that “over the next decade, older age groups will start to catch up with younger age groups in terms of adoption of mobile payments.”


Source: UK Finance

Of course, the flip side of a growing preference for card and mobile wallet payments is the continued decline in cash usage, which went from accounting for 62% of all payments in 2006 to just 15% in 2021.

However, the decreasing share of payments that use cash is not evenly distributed among U.K. consumers.

The UK Finance report notes that although the portion of the population with a strong preference for cash transactions is diminishing slowly each year, the number of people who rarely or never use cash is growing more rapidly.

The report adds that “over the next decade the number of cash payments in the UK is expected to continue to fall […], although the rate of decline is expected to slow as use becomes concentrated amongst people who have a strong preference for cash and in situations where cash has advantages over other payment methods.”

Finally, the report predicts that in 2031 there will be fewer than 3 billion cash payments made in the U.K., accounting for around 6% of all payments.

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