In this December round up of retail payments, we see how the second national lockdown continued to impact the volume and value and of payments processed in the UK.

Note: All data is publicly sourced and is the latest available: Pay.UK November 2020, Link December 2020 and UK Finance September 2020.

Bacs Direct Debit and Direct Credit

In the 12 months to the end of November 2020 we see that:

  • Bacs Direct Credit volumes have decreased by 6% (12 months to October 5%)
  • Bacs Direct Debit volumes have increased by 1% (12 months to October 1%)
  • Total Bacs volumes have decreased by 1% (12 months to October 1%)
  • Bacs Direct Credit values have decreased by 2% (12 months to October 2%)
  • Bacs Direct Debit values have decreased by 11% (12 months to October 10%)
  • Total Bacs values have decreased by 4% (12 months to October 4%)

Volumes for Bacs Direct Credits continue to be subdued for the 12 month period, with the first lockdown still impacting the year on year comparison; month on month volumes and overall value had increased after falling back in August – but have remained relatively stable despite the national restrictions introduced in November.

The small growth in Direct Debit volumes has continued although values continue to fall, again the earlier lockdown impacting year on year; month on month again both volume and value have increased since August.

Overall Bacs values and volumes are still on a slight downward trend for the 12 month period – with ongoing restrictions we are unlikely to see a significant change and it will be interesting to see if payments remain stable at the current level despite the recent Tier 3 and Tier 4 restrictions now introduced.

CHAPS

In the 12 months to the end of November 2020 we see that:

  • CHAPS volumes have decreased by 8% (12 months to October 8%) 

This was made up of a 11% decrease in retail / commercial based payments and a 3% increase in financial institution payments – the same as the changes seen for the 12 months to October.

  • CHAPS values have increased by 10% (12 months to October 8%)

This month the change was made up of an 11% increase in retail / commercial based payments and a 9% increase in financial institution based payments, compared to 8% and 8% respectively for the 12 months to October.

Whilst overall volumes and values for financial institution payments continue to increase this is flattening from the increases seen in earlier months – although these payments still demonstrate the resilience seen throughout the year.

Retail / Commercial payment activity continues to fall – however the trend of a smaller number of higher value payments such that overall values increase, continues to be seen.

Faster Payments

In the 12 months to the end of November 2020 we see that:

  • Single Immediate Payments have increased by 24% (12 months to October 23%)
  • Total Faster Payment volumes have increased by 17% (12 months to October 16%)
  • Total Faster Payment values have increased by 8% (12 months to October 7%)

Thus the trend continues such that monthly volumes remain above pre-Covid levels despite the probable impact from the second national lockdown in November; the total number of Faster Payments processed in November 2019 was 213,369,000 compared to 263,070,000 in November 2020.

Cheques

In the 12 months to the end of November 2020 we see that:

  • Cheque volumes have decreased by 25% (12 months to October 22%).
  • Cheque values have decreased by 37% (12 months to October 34%).

Thus, despite the introduction of the image-based cheque clearing system, the volumes of cheques have continued to drop over the 12 month period, albeit month on month this had recovered since the lows of the first lockdown.    With the further national lockdown in November and Tier 3 and 4 restrictions introduced in December this trend is likely to continue.

LINK – ATM Withdrawals

Key observations for week ending 20 December:

  • Last week ATM transactions increased by 1.1million (when compared to the previous week).
  • Last week’s ATM transactions were 19.6 million less than the equivalent week in 2019.
  • Weekly ATM use has reduced by 38% (compared to equivalent week in 2019).

Source: LINK

The latest figures from LINK show the continued effect of the UK’s increasing digital payment habits with the local lockdowns and now the stricter Tier 3/4 announcements which came into force in the last week.

Source: LINK

Rolling volume change (compared to 2019): 

  • w/e 13 December: -36%
  • w/e 20 December: -38%

Rolling value change (compared to 2019): 

  • w/e 13 December: -28%
  • w/e 20 December: -33%

For more visit out: ATM Tracker.

Debit and Credit Cards

Source: UK Finance

The UK Finance Update for September 2020 reports:

Card transactions by UK cardholders both in the UK and overseas:

  • There were 1.6 billion debit card transactions in September, 2.9 per cent more than in August and 6.1 per cent more than in September last year. The total spend of £58.5 billion was 0.2 per cent higher than in August and 12.8 per cent higher than last September.
  • There were 281 million credit card transactions in September, 2.8 per cent more than in August but 6.1 per cent fewer than in September last year. The total spend of £14.2 billion was 3.1 per cent higher than in August but 17.3 per cent less than last September.
  • Outstanding balances on credit card accounts have contracted by 14 per cent over the twelve months to September, as a result of repayments outstripping new borrowing in the year.

Card transactions made in the UK by cardholders from both the UK and from overseas countries:

  • There were 1.1 billion debit and credit card transactions in the UK in September, 4.2 per cent fewer than in August and 31 per cent fewer than in September last year. The total spend of £48.9 billion was 5.1 per cent less than the previous month and 18.3 per cent less than last September.
  • Contactless payments accounted for 46 per cent of all credit card and 64 per cent of all debit card transactions.
  • There were 701 million contactless card transactions in September, 1.1 per cent fewer than in August and 5.3 per cent less than the 740 million last September. The total value of contactless transactions was £8.2 billion in September, a 2.8 per cent decrease from August but a 18.1 per cent increase on £7 billion last September.
  • The number of contactless credit card transactions was 1.8 per cent higher than in August but 16.4 per cent lower than last September. The number of contactless debit card transactions was 1.6 per cent lower than August and 3.3 per cent lower than last September.

Current Account Switch Service

Monthly data 2020:

Source: Pay.UK

A total of 6.9 million current accounts have now been switched since the service was launched in September 2013

In 2020 to date 650981 current account switches have been completed. This is a significant (COVID) reduction on the historic number of switches as, for example, for the same period during 2019, 907183 switches were completed.

For more visit our: Current Account Switching Tracker.

Conclusion

In this latest retail payments round up, the story of the increasing use of digital and contactless payments continues.  

The pandemic has hastened the fall in cheque volumes and cash transactions – this fall is increasing with the impact from the second lockdown.

Local lockdowns followed by the second national lockdown had reinforced these digital payment habits and the Tier 3 and 4 restrictions now introduced are only likely to escalate this trend.

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