Wednesday, 6 August 2014

How are UK consumers paying for purchases?

Cash or credit or debit or contactless or mobile payment?

Only 50 years ago, consumers used mainly cash to pay for purchases at the point of sale, although some paid with cheques. Credit cards were first introduced into the UK market in the 1960s--a major change that still reverberates today.

How consumers pay for UK purchases has changed over the years. Cash is no longer the overwhelming favourite for payments, a trend that is unlikely to reverse in the future. In 2010, fewer cheques were being written than in years past; less cash was being dispensed at ATMs; and more cards (debit mainly but also credit) were being used at the point of sale.

Just two months ago, the Payments Council released a report saying that cash still accounted for 52% of all UK payments in 2013. So coins and bills are not going away anytime soon.

Although credit cards are in widespread use--an estimated 64% of the UK adult population carries a credit card--there has been tremendous growth in the use of debit cards during the 21st century.

Another trend is the rise of contactless payments--via plastic or a key fob or another device held near the till--increasingly accepted for transportation and other purchases. In fact, competing mobile wallets (also known as digital wallets) are on offer, allowing consumers to use the mobile itself or a mobile phone number to pay. Tesco wants you to use its mobile wallet, as does PayPal, among others.

Individual marketers are also providing apps to facilitate speedy, convenient mobile payment. Starbucks has payment apps for iPhones and Android mobiles.

Watch for more changes in consumer behaviour as the usage of mobile shopping and mobile payments increase in the coming years.