July & August 2016 Credit Management magazine

CMNEWS
A
round-up
of news stories
from the world
of consumer and
commercial
credit.
By Sean Feast and Alex Simmons
“With so much innovation
happening in payments at the
moment – it is very difficult
to predict which of these new
innovations will change the
face of the way we pay’’
DEBIT CARDS TO OVERTAKE
CASH PAYMENTS BY 2021
DEBIT cards are on track to take over
from cash in the next five years as the
UK’s most frequently used payment
method, according to a new report
from Payments UK.
The report, UK Payment Markets 2016,
reveals over 72,000 payments were made
every minute in the UK in 2015 by consumers
and businesses – totaling more than 38
billion payments. By 2025 this will go up to
79,044 payments every minute (or 42 billion
in the year), with increasing card usage
playing a major part.
Cash was still the most popular payment
method in 2015 accounting for roughly half
(45.1 percent) of all payments. However, it
is predicted that by 2025 notes and coins
will drop to just over one in four (27 percent)
payments. The tipping point for the most
popular payment method will be reached in
2021 when 14.5 billion debit card payments
are predicted, overtaking the forecast 13
billion cash payments for the first time.
Payments UK also forecasts another
landmark in 2025, when credit, debit and
charge cards will account for more than half
of all payments made (50.2 percent) – driven
in large part by the increasing popularity of
contactless cards.
Focusing solely on payments made by
consumers, the average UK adult made
20 card payments per month in 2015, of
which around one in 10 were contactless.
By 2025 individuals are predicted to use a
debit, credit or charge card virtually every
day (30 times per month) and almost half of
these transactions - 14 per month - will be
contactless. Further, many of these payments
may be made using a mobile phone, without
consumers needing to carry their plastic
cards with them.
Adrian Buckle, Chief Economist from
Payments UK, says technology, consumer
choices, business behaviour and market
developments are major factors in how we
choose to pay, and will have a major impact
on how things change over the next ten
years:
“With so much innovation happening
in payments at the moment – not just
from traditional payment providers but
increasingly from new players such as
retailers, FinTechs and other technology
providers – it is very difficult to predict
which of these new innovations will
change the face of the way we pay. How
their fortunes fare rests in the hands of
consumers and businesses but one or two
of them are bound to be big winners and
potentially losers in the next decade.”
There were 13 percent fewer cheques
written in 2015 compared to a year
earlier, but this still resulted in more than
546 million cheque payments in the
year, showing they are still valued as a
convenient and secure method of payment
by those who choose to use them. In value
terms, the CHAPS payment scheme, which
is used primarily for wholesale financial and
corporate treasury payments, accounted for
£68.4 trillion – or more than 90 percent of
the total value across all payment types.
6 July / August 2016 www.cicm.com
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