In this April round up of retail payments, we see the impact of the final month 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 March 2021, Link April 2021 and UK Finance January 2021.

Source: Pay.UK Limited

Bacs Direct Debit and Direct Credit

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

  • Bacs Direct Credit volumes have decreased by 4% (12 months to February 6%)
  • Bacs Direct Debit volumes have remained at the same level (12 months to February decreased 1%)
  • Total Bacs volumes have decreased by 2% (12 months to February 2%)
  • Bacs Direct Credit values have decreased by 1% (12 months to February 1%)
  • Bacs Direct Debit values have decreased by 13% (12 months to February 13%)
  • Total Bacs values have decreased by 4% (12 months to February 4%)

Volumes for Bacs Direct Credits has again seen some recovery with the percentage reduction year on year falling from 6% back to 4% – the same level seen at the end of Lockdown 2.0.

The small growth in Direct Debit volumes year on year ended with a reduction of 1% recorded for the year to January 2021. The volumes seen in March 2021 were 5% higher which has halted the decline with no change in overall volumes now seen year on year.

Overall Bacs volumes and values remain on a downward trend for the 12 month period – with the overall trend unchanged for March. However, we would expect that a recovery in both volumes and values will be seen as restrictions are lifted further over the coming weeks.

CHAPS

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

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

This was made up of a 12% decrease in retail / commercial based payments and a zero change in financial institution payments – compared to the 13% and 1% respectively also seen for the 12 months to February.

  • CHAPS values have increased by 8% (12 months to February 11%)

This month the change was made up of an 12% increase in retail / commercial based payments and a 7% increase in financial institution based payments, compared to 14% and 10% respectively for the 12 months to February.

Volumes for wholesale payments have increased in March with volumes now in line with March 2020. This has kept the year on year volume unchanged and the resilience seen throughout the last 12 months 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. Volumes fell back again in January, recovered slightly in February and further in March with volumes 8% higher than March 2020 . We would now expect this trend to continue but it is likely to take some time for year on year volumes to recover.

Faster Payments

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

  • Single Immediate Payment volumes have increased by 22% (12 months to February 22%)
  • Total Faster Payment volumes have increased by 16% (12 months to February 15%)
  • Single Immediate Payment values have increased by 14% (12 months to February 13%)
  • Total Faster Payment values have increased by 9% (12 months to January 8%)

Thus, the trend has continued in March with total payments processed ahead of 2020 levels – the total number processed in March 2021 was 292,354,000 compared with 229,057,000 in March 2020. The increased use of faster payments seems to be a digital payment habit that will be here to stay, reinforced throughout each lockdown over the last 12 months.

Cheques

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

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

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 in March are greater than those at the beginning of Lockdown 1.0 and the year on year rate of decline could now slow down as restrictions are lifted. Therefore the underlying level of resilience in cheque usage continues to be seen.

LINK – ATM Withdrawals

Key observations for week ending 18 April:

Last week ATM transactions increased by 4.6 million (when compared to the previous week).

Last week’s ATM transactions were 9.7 million more than the equivalent week in 2020.

Weekly ATM use has increased by 48% 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 the Tier 4 restrictions towards the end of last year, followed by the third national lockdown at the start of 2021. 

We now see ATM usage remaining ahead of 2020 and likely to increase further as restrictions are lifted – in particular we have seen a spike in the last week as non essential stores re-opened and pubs and restaurants were allowed to serve customers in their outdoor seating and garden areas thus increasing overall activity.

Source: LINK

Rolling volume change (compared to 2020): 

  • w/e 11 April : +24%
  • w/e 18 April: +48%

Rolling value change (compared to 2020): 

  • w/e 11 April: +39%
  • w/e 18 April: +59%

For more visit out: ATM Tracker.

Debit and Credit Cards

Source: UK Finance

The UK Finance Update for January 2021 reports:

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

  • There were 1.2 billion debit card transactions in January, 26.6 per cent fewer than in December and 18.1 per cent fewer than in January 2020. The total spend of £47.8 billion was 18.8 per cent less than in December and 7.3 per cent less than January 2020.
  • There were 196 million credit card transactions in January, 32.9 per cent fewer than in December and 31.1 per cent fewer than in January 2020. The total spend of £10.7 billion was 27.6 per cent less than in December and 37.9 per cent less than January 2020.
  • Outstanding balances on credit card accounts have contracted by 20.7 per cent over the twelve months to January, 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 1.2 billion debit and credit card transactions in the UK in January, 26.7 per cent fewer than in December and 23.6 per cent fewer than in January 2020. The total spend of £53.2 billion was 17.5 per cent less than the previous month and 10.5 per centless than January 2020.
  • Contactless payments accounted for 35 per cent of all credit card and 57 per cent of all debit card transactions.
  • There were 645 million contactless card transactions in January, 31.3 per cent fewer than in December and 26.6 per cent fewer than the 878 million in January 2020. The total value of contactless transactions was £8 billion in January, a 34 per cent decrease from December and a 2.8 per cent decrease on £8.3 billion in January 2020.
  • The number of contactless credit card transactions was 37.7 per cent lower than in December and 44.6 per cent lower than January 2020. The number of contactless debit card transactions was 30.5 per cent lower than December and 23.5 per cent lower than January 2020.

Current Account Switch Service

This section will be updated when the March 2021 data is available

Monthly data 2020:

Source: Pay.UK

Monthly data: 2021:

Source: Pay.UK

A total of 7.2 million 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. The number of total switches in Q1 2021 decreased by 51,297 compared to the previous quarter as social distancing measures were re-introduced across the U.K, although figures between February 2021 and March 2021 increased from 42398  to 63724.

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. This has fallen back in March to a more usual level of 8.9%.

For more visit our: Current Account Switching Tracker.

Conclusion

In this latest retail payments round up, we continue to see our digital payment habits evidenced most clearly in the continued rise of both the volume and value of single immediate faster payments. Volumes and values have increased in March 2021 and we would expect this trend to continue as restrictions are lifted and overall activity increases.

The pandemic hastened the fall in cheque volumes and ATM cash transactions during 2020. However we have not seen a further significant decline in the latest lockdown with volumes and values for both in line with that seen during Lockdown 1.0. In March we have now seen increases month on month in both cheque volumes and values and ATM transactions and we would expect a further uplift as more restrictions are lifted over the coming weeks.

However the growth in the volume and value of digital and contactless payments is likely to outstrip any uplift cheque and cash transactions and therefore their share of overall activity is likely to continue to decline.

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