In this February round up of retail payments, we see the impact of Lockdown 3.0 on the volume and value of payments processed in the UK.

Note: All data is publicly sourced and is the latest available: Pay.UK January 2021, Link February 2021 and UK Finance November 2020.

Source: Pay.UK Limited

Bacs Direct Debit and Direct Credit

In the 12 months to the end of January 2021 we see that:

  • Bacs Direct Credit volumes have decreased by 6% (12 months to December 4%)
  • Bacs Direct Debit volumes have decreased by 1% (12 months to December increased 1%)
  • Total Bacs volumes have decreased by 2% (12 months to December 1%)
  • Bacs Direct Credit values have decreased by 1% (12 months to December 1%)
  • Bacs Direct Debit values have decreased by 13% (12 months to December 11%)
  • Total Bacs values have decreased by 4% (12 months to December 4%)

Volumes for Bacs Direct Credits had seen some recovery following the ending of the second national lockdown with the percentage reduction year on year falling from 6% to 4% in December.

Bacs Direct Credit volumes were greater in December 2020 than in December 2019 recording an increase of 14% for the month.

However with Lockdown 3.0 commencing at the beginning 2021, volumes have fallen back again by 14% in January with the year on year reduction now back to 6%.

The small growth in Direct Debit volumes year on year has also come to an end with the reduction of 1% recorded for the year to January 2021. In recent months we had seen year on year increases for each month – however again this was brought to a halt in January with a fall of 10% for the month.

Overall Bacs volumes and values remain on a downward trend for the 12 month period – and with Lockdown 3.0 now commencing a further fall to 2% has occurred. However, although is still likely to be some weeks away, we would expect that a recovery in both volumes and values would be seen when restrictions are lifted.

CHAPS

In the 12 months to the end of January 2021 we see that:

  • CHAPS volumes have decreased by 10% (12 months to December 8%) 

This was made up of a 13% decrease in retail / commercial based payments and a 1% increase in financial institution payments – compared to 12% and 3% respectively for the 12 months to December.

  • CHAPS values have increased by 11% (12 months to December 10%)

This month the change was made up of an 13% increase in retail / commercial based payments and a 10% increase in financial institution based payments, compared to 13% and 9% respectively for the 12 months to December.

Whilst overall volumes and values for financial institution payments continued to increase this had flattened in recent months followed by a jump seen again in December. Volumes fell back in January reducing the growth to 1% but nevertheless the resilience seen throughout the year continues to be displayed.

Retail / Commercial payment activity had fallen throughout the year – however for the month of December volumes just crept ahead of December 2019. With the lockdown in January, volumes have again fallen back month on month – but the experience seen in December is that this should reverse once restrictions are lifted.

The trend of a smaller number of higher value payments such that overall values increase, continues to be seen in both retail and wholesale payments.

Faster Payments

In the 12 months to the end of January 2021 we see that:

  • Single Immediate Payment volumes have increased by 22% (12 months to December 24%)
  • Total Faster Payment volumes have increased by 15% (12 months to December 17%)
  • Single Immediate Payment values have increased by 12% (12 months to December 13%)
  • Total Faster Payment values have increased by 7% (12 months to December 8%)

Thus, although the trend continues such that monthly volumes remain above pre-Covid levels, the trajectory does now appear to be slowing down in Lockdown 3.0; the total number of Faster Payments processed in December 2020 was 269,379,000 compared to 226,705,000 in December 2019; however January comparisons are 233,196,000 for 2021 and 223,358,000 in January 2020.

Cheques

In the 12 months to the end of January 2021 we see that:

  • Cheque volumes have decreased by 30% (12 months to December 27%).
  • Cheque values have decreased by 44% (12 months to December 41%).

Thus, despite the introduction of the image-based cheque clearing system, the volumes have continued to drop over the 12 month period. Monthly volumes processed by the Image Clearing System however are still greater than at the beginning of Lockdown 1.0. 

LINK – ATM Withdrawals

Key observations for week ending 14 February:

  • Last week ATM transactions decreased by 0.9 million (when compared to the previous week).
  • Last week’s ATM transactions were 19.2 million less than the equivalent week in 2020.
  • With the impact from Lockdown 3.0 continuing, weekly ATM use has reduced by 45% (compared to the equivalent week in 2020).

Source: LINK

The latest figures from LINK show the impact from the UK’s continuing digital payment habits, reinforced by more widespread Tier 4 restrictions towards the end of last year, followed by the third national lockdown at the start of 2021. However, at the current time, transaction levels still appear to have stabilised around the same level as that seen in Lockdown 1.0.

The decrease in the number of ATM transactions over the last few weeks is following the same pattern seen in previous years. However the overall number, although significantly below that seen in February 2020, is still tracking slightly ahead of that seen at the beginning of Lockdown 1.0.

Source: LINK

Rolling volume change (compared to 2020): 

  • w/e 7 February: -45%
  • w/e 14 February: -45%

Rolling value change (compared to 2020): 

  • w/e 7 February: -35%
  • w/e 14 February: -37%

For more visit out: ATM Tracker.

Debit and Credit Cards

This section has now been updated with the data for November 2020.

Source: UK Finance

The UK Finance Update for November 2020 reports:

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

  • There were 1.5 billion debit card transactions in November, 6.7 per cent fewer than in October and 7.0 per cent fewer than in November 2019. The total spend of £53.6 billion was 3.0 per cent less than in October but 3.5 per cent more than November 2019.
  • There were 273 million credit card transactions in November, 0.1 per cent fewer than in October and 11.4 per cent fewer than in November 2019. The total spend of £14.6 billion was 4.0 per cent higher than in October but 15.2 per cent less than November 2019.
  • Outstanding balances on credit card accounts have contracted by 15.7 per cent over the twelve months to November, 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 1.5 billion debit and credit card transactions in the UK in November, 11.6 per cent fewer than in October and 12.4 per cent fewer than in November 2019. The total spend of £58.8 billion was 8.4 per cent less than the previous month but 0.3 per cent more than November 2019.
  • Contactless payments accounted for 37 per cent of all credit card and 59 per cent of all debit card transactions.
  • There were 817 million contactless card transactions in November, 17.6 per cent fewer than in October but 10.4 per cent more than the 740 million in November 2019. The total value of contactless transactions was £9.9 billion in November, a 17.2 per cent decrease from October but a 43.7 per cent increase on £6.9 billion in November 2019.
  • The number of contactless credit card transactions was 22.0 per cent lower than in October and 15.9 per cent lower than November 2019. The number of contactless debit card transactions was 17.0 per cent lower than October but 15.1 per cent more than November 2019.

Current Account Switch Service

Monthly data 2020:

Source: Pay.UK

Monthly data: 2021:

Source: Pay.UK

A total of 7million current accounts have now been switched since the service was launched in September 2013

In 2020 691489 current account switches were completed – a significant (COVID) reduction on the historic number of switches seen – in 2019 for example 978400 switches were completed.

Lockdown 3.0 is clearly impacting as the number of switches in January 2021 was the fourth lowest over the last 12 month period – very close to the May, June and July ‘lockdown lows’ of 2020.

15% of switches were for Small Business and Charity accounts in January 2021 – a much higher percentage than normal.

For more visit our: Current Account Switching Tracker.

Conclusion

In this latest retail payments round up, digital and contactless payment habits continue to be seen, reinforced through each lockdown.

The pandemic has hastened the fall in cheque volumes and ATM cash transactions – however we can still see a resilience in the usage at the current levels; Cheque volumes and values have increased since Lockdown 1.0 and ATM transactions remain at a similar level to that first lockdown. At the moment it looks like a further sharp fall in both during 2021 is not likely to occur.

Lockdown 3.0 is undoubtedly having an impact on activity levels across all payment types – however experience in 2020 would suggest that an uplift will occur once restrictions can be relaxed which may be possible in just a few weeks time.

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