In this March round up of retail payments, we continue to 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 February 2021, Link March 2021 and UK Finance December 2020.

Source: Pay.UK Limited

Bacs Direct Debit and Direct Credit

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

  • Bacs Direct Credit volumes have decreased by 6% (12 months to January 6%)
  • Bacs Direct Debit volumes have decreased by 1% (12 months to January increased 1%)
  • Total Bacs volumes have decreased by 2% (12 months to January 2%)
  • Bacs Direct Credit values have decreased by 1% (12 months to January 1%)
  • Bacs Direct Debit values have decreased by 13% (12 months to January 13%)
  • Total Bacs values have decreased by 4% (12 months to January 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 had fallen back again by 14% in January with the year on year reduction now back to 6%. Similar volumes were seen in February with the reduction in payments for the 12 months remaining at 6%.

The small growth in Direct Debit volumes year on year ended with a reduction of 1% recorded for the year to January 2021. This has also continued into February with a reduction of 1% in the year on year volumes also seen year on year.

Overall Bacs volumes and values remain on a downward trend for the 12 month period – and with Lockdown 3.0 continuing to impact a further fall has occurred. However, we would expect that a recovery in both volumes and values will be seen when restrictions are lifted in the coming weeks.

CHAPS

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

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

This was made up of a 13% decrease in retail / commercial based payments and a 1% increase in financial institution payments – with no change to the 13% and 1% respectively also seen for the 12 months to January.

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

This month the change was made up of an 14% increase in retail / commercial based payments and a 10% increase in financial institution based payments, compared to 13% and 10% respectively for the 12 months to January.

Volumes have remain subdued in February keeping the year on year growth at 1% but nevertheless the resilience seen throughout the year continues to be displayed. For the month of February, volumes this year – in lockdown – are in line with 2020 pre lockdown levels.

Retail / Commercial payment activity had fallen throughout the year – however for the month of December volumes just crept ahead of December 2019. Volumes fell back again in January and although recovering slightly in February still remain 3.5% lower compared with February 2020. However, given the experience seen in December we would expect this to reverse once restrictions are lifted although it is likely to take some time for year on year volumes to recover.

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 February 2021 we see that:

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

Thus, the trend has remained steady in February with total payments processed ahead of 2020 pre-Covid levels – the total number processed in February 2021 was 237,811,000 compared with 208, 756,000 in February 2020. The increased use of faster payments is definitely a digital payment habit that has continued to stick, reinforced throughout each lockdown over the last 12 months.

Cheques

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

  • Cheque volumes have decreased by 33% (12 months to January 30%).
  • Cheque values have decreased by 46% (12 months to January 44%).

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 remain in line with those at the beginning of Lockdown 1.0 and therefore there seems to be an underlying level of resilience in cheque usage which continues to occur.

LINK – ATM Withdrawals

Key observations for week ending 14 March:

  • Last week ATM transactions decreased by 0.4 million (when compared to the previous week).
  • Last week’s ATM transactions were 17.2 million less than the equivalent week in 2020.
  • With the impact from Lockdown 3.0 continuing, weekly ATM use has reduced by 41% (compared to the equivalent week in 2020 – just before the start of Lockdown 1.0).

Source: LINK

The latest figures from LINK show the impact from the UK’s continuing digital payment habits, reinforced by the Tier 4 restrictions towards the end of last year, followed by the third national lockdown from the start of 2021. 

The overall number of transactions, although clearly significantly below that seen in February 2020, continues to track slightly ahead of that seen at the beginning of Lockdown 1.0. It will be interesting to see the comparison between the years in the next week, once we reach the anniversary of the beginning of the first lockdown.

Source: LINK

Rolling volume change (compared to 2020): 

  • w/e 7 March: -42%
  • w/e 14 March: -41%

Rolling value change (compared to 2020): 

  • w/e 7 March: -33%
  • w/e 14 March: -34%

For more visit out: ATM Tracker.

Debit and Credit Cards

This section has now been updated with the report for December 2020.

Source: UK Finance

The UK Finance Update for December 2020 reports:

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

  • There were 1.7 billion debit card transactions in December, 10.9 per cent more than in November but 5.2 per cent fewer than in December 2019.
  • The total spend of £58.9 billion was 10 per cent higher than in November and 3.4 per cent higher than December2019.There were 291 million credit card transactions in December, 6.9 per cent more than in November but 15.1 per cent fewer than in December 2019.
  • The total spend of £14.8 billion was 1.5 per cent higher than in November but 19.4 per cent less than December2019. Outstanding balances on credit card accounts have contracted by 16.8 per cent over the twelve months to December, 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 1.7 billion debit and credit card transactions in the UK in December, 12.1 per cent more than in November but 9.6 percent fewer than in December 2019. The total spend of £64.4 billion was 9.5 per cent higher than the previous month and 0.7 percent higher than December 2019.
  • Contactless payments accounted for 41 per cent of all credit card and 60 per cent of all debit card transactions.
  • There were 939 million contactless card transactions in December, 15 per cent more than in November and 25.8 per cent more than the 746 million in December 2019. The total value of contactless transactions was £12.2 billion in December, a 22.5 per cent increase from November and a 64.7 per cent increase on £7.4 billion in December 2019.
  • The number of contactless credit card transactions was 19.7 per cent higher than in November and 2.1 per cent higher than December 2019. The number of contactless debit card transactions was 14.4 per cent higher than November and 30 per centhigher than December 2019.

Current Account Switch Service

This section is now updated with the February 2021 report.

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 was 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. There has been some recovery in February but numbers remain significantly below pre-Covid levels.

A high number of switches for Small Business and Charity accounts was again seen in February – at 13.5% still a 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; both cheque volumes and values 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 are relaxed over the next few weeks.

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