In this June round up of retail payments, as restrictions continue to ease, we see the impact on the volume and value of payments processed in the UK.

Note: All data is publicly sourced and is the latest available: Pay.UK May 2021, Link June 2021 and UK Finance March 2021.

Source: Pay.UK Limited

Bacs Direct Debit and Direct Credit

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

  • Bacs Direct Credit volumes have decreased by 3% (12 months to April 4%)
  • Bacs Direct Debit volumes have increased by 1% (12 months to April unchanged)
  • Total Bacs volumes have remained unchanged (12 months to April decreased by 1%)
  • Bacs Direct Credit values have increased by 1% (12 months to April decreased by 1%)
  • Bacs Direct Debit values have decreased by 6% (12 months to April 10%)
  • Total Bacs values have decreased by 1% (12 months to April 3%)

The recovery in volumes for Bacs Direct Credits has been sustained with the percentage reduction now unchanged.

The small growth in Direct Debit volumes year on year seen through 2020 has returned with an increase of 1% recorded for the year to May 2021.

Overall Bacs volumes are now unchanged year on year and the downward trajectory in values over the 12 month period is decreasing. With restrictions continuing to ease, we are seeing a recovery in both volumes and values and we would expect this to continue as restrictions are eased further over the coming weeks.

CHAPS

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

  • CHAPS volumes have decreased by 4% (12 months to April 7%) 

This was made up of a 5% decrease in retail / commercial based payments and a 2% increase in financial institution payments – compared to the 9% and zero change respectively seen for the 12 months to April.

  • CHAPS values have increased by 4% (12 months to March 6%)

This month the change was made up of an 9% increase in retail / commercial based payments and a 2% increase in financial institution based payments, compared to 9% and 4% respectively for the 12 months to April.

Volumes for wholesale payments have reduced in May compared to April but remain 8% ahead of May 2020. This has contributed to the 2% year on year increase and the resilience seen throughout the last 12 months continues to be displayed.

Retail / Commercial payment activity had fallen throughout 2020 – however for the month of December volumes just crept ahead of December 2019. Volumes fell back again in January but have recovered since. This was again seen in May with volumes 20% ahead of May 2020 . We would now expect this trend to continue but it is likely to take some time for year on year volumes to recover fully.

Faster Payments

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

  • Single Immediate Payment volumes have increased by 27% (12 months to April 25%)
  • Total Faster Payment volumes have increased by 21% (12 months to April 19%)
  • Single Immediate Payment values have increased by 22% (12 months to April 18%)
  • Total Faster Payment values have increased by 18% (12 months to April 14%)

Thus, the trend has continued in May with both volumes and values significantly ahead of 2020 levels; May 2021 saw an increase of 28% in the volume of Single Immediate Payments processed in the month and 40% in the value of Single Immediate Payments. 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 May 2021 we see that:

  • Cheque volumes have decreased by 27% (12 months to April 29%).
  • Cheque values have decreased by 38% (12 months to April 43%).

Thus, despite the introduction of the image-based cheque clearing system, the volumes have continued to drop over the 12 month period. Volumes processed by the Image Clearing System in May were 3% lower than during Lockdown 1.0 although the value was 21% greater for the month. Therefore the underlying level of resilience in cheque usage continues to be seen.

LINK – ATM Withdrawals

Key observations for the week ending 20 June 2021

Last week the volume of ATM transactions increased by 1% when compared to the previous week in 2021.

Last week the volume of ATM transactions increased by 11% when compared to the equivalent week in 2020.

Last week the volume of ATM transactions decreased by 40% when compared to the equivalent week in 2019.

Thus ATM usage remains ahead of 2020 with the equivalent period last year now reflecting the re-opening of non essential retail stores albeit hospitality would remain closed for another three weeks.

The overall total volume of ATM transactions also remains just ahead of the first spike seen in the middle of April when outdoor hospitality first re-opened with a fairly consistent pattern seen over these last few weeks.

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. 

This next graph also reflects the initial impact from Lockdown 3.0 but then a gradual increase from January to March can be seen followed by the spikes at the end of March and in mid April as restrictions were eased at each of these stages.

If the volume of transactions remain in line or just ahead of 2020 then it continues to look likely that the same floor in the number of transactions seen in 2020 will be seen during 2021. Thus, whilst digital payment habits were reinforced during each lockdown, we continue to expect to see a consistent underlying level of cash usage throughout this year by those who need to rely on cash or by those who choose to rely on cash.

Currently, for the remainder of June 2021, we have all sectors operating with social distancing in place compared to the situation in 2020 with non-essential retail open but hospitality still closed. The year on year comparison for the initial weeks in July will be interesting as over this time the conditions which will remain in place this year are similar to those which were in place over the Summer of 2020 and thus allow a more direct comparison of cash activity across the 2 years.

Source: LINK

Rolling volume change (compared to 2020): 

  • w/e 13 June: +18%
  • w/e 20 June: +11%

Rolling value change (compared to 2020): 

  • w/e 13 June: +16%
  • w/e 20 June: +11%

For more information visit our: ATM Tracker.

Debit and Credit Cards


Source: UK Finance

The UK Finance Update for March 2021 reports:

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

  • There were 1.5 billion debit card transactions in March, 21.4 per cent more than in February and 2.9 per cent more than in March 2020. The total spend of £56.2 billion was 19.6 per cent higher than in February and 2.7 per cent higher than March 2020.
  • There were 256 million credit card transactions in March, 26.9 per cent more than in February but 6.5 per cent fewer than in March 2020. The total spend of £14.1 billion was 28.9 per cent higher than in February but 2.2 per cent less than March 2020.
  • Outstanding balances on credit card accounts have contracted by 18.5 per cent over the twelve months to March, 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 March, 24.7 per cent more than in February and 3.3 per cent more than in March 2020. The total spend of £62.3 billion was 19.1 per cent higher than the previous month and 14.2 per cent higher than March 2020.
  • Contactless payments accounted for 41 per cent of all credit card and 59 per cent of all debit card transactions.
  • There were 855 million contactless card transactions in March, 28.1 per cent more than in February and 6.8 per cent more than the 801 million in March 2020. The total value of contactless transactions was £10.4 billion in March, a 25.3 per cent increase from February and a 29.7 per cent increase on £8 billion in March 2020.
  • The number of contactless credit card transactions was 29.6 per cent higher than in February but 10.3 per cent lower than March 2020. The number of contactless debit card transactions was 27.9 per cent higher than February and 9.4 per cent higher than March 2020.

Current Account Switch Service

Monthly data 2020:

Source: Pay.UK

Monthly data: 2021:

Source: Pay.UK

A total of 7.3 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.

As restrictions have eased this increased again between February 2021 and March 2021 – from 42398  to 63724. The number of switches has fallen back slightly in May – but at 61446 this still equates to nearly double the number of switches when compared with January of this year.

A high number of switches for Small Business and Charity accounts had been seen in January and February. However, this had fallen back in March and April and the level in May remains at the more usual level of 5.7%

For more information 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 of these payments have increased significantly in May 2021 compared to 2020 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 had 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.

Cheque volumes have fallen back slightly in May 2021 compared to 2020 although the value has increased; ATM transaction volumes in 2021 are now 11% greater than the equivalent week in 2020 and we could see 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 are likely to outstrip any uplift in cheque and cash transactions and therefore we would expect the share of these payment methods within the overall activity to continue to decline.

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