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UK payments fall as Covid-19 curbs spending habits

The total number of payments in the UK in 2020 fell for the first time in six years as the pandemic forced a curb in consumer spending.

The latest data from UK Finance showed an 11% fall in payments to 35.6 billion. For consumer payments, specifically, the number fell by 13% to 30.7 billion.

 

In 2020, the number of cash payments made in the UK fell by 35% and remains the second most frequently used payment method behind debit cards.

 

The number of contactless payments made in the UK increased by 12% to 9.6 billion payments during the year with this type of payment accounting for more than a quarter of all UK payments.

 

The report also highlighted significant growth in payments made via mobile phones or smart watches, with 32% of UK adults registered to use this form of payment by the end of 2020.

 

Compared to figures for 2019, this represented an increase of 7.4 million.

 

David Postings, chief executive of UK Finance, said: “The pandemic resulted in some marked changes in payments behaviour and while it’s too early to say whether they are permanent changes, we did see an acceleration in some existing trends such as the reduction in cash usage and the growth in contactless and mobile payments.

 

“The increase in the contactless limit to £45 coupled with retailers encouraging its use meant that more than a quarter of all payments in 2020 were made via contactless. There remains real diversity in the way in which people choose to conduct their day-to-day spending and the banking and finance industry is committed to helping customers make payments in a variety of different ways.”

 

According to a Merchant Advice Service study, 64% of UK adults have not made a single cash purchase within the past 12 months, with 86% stating contactless as their preferred method of payment.

 

Libby James, co-founder of Merchant Advice Service, said: “Since lockdown, we have seen a significant spike in Britons turning to new forms of contactless payment methods, whether that’s via mobile pay, a smart watch or just using a contactless card. We can only presume that Britons have increasingly shifted towards contactless payment methods over the past year due to confusion over whether shops/restaurants are even accepting cash payments, and also because they offer a level of protection cash cannot.

 

“Contactless payments allow reduced contact with others and helps to reduce the chances of Covid-19 being transmitted so easily, and as a result alleviates the fear of spreading the virus.”

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