Payments Tracker

In this fourth round up of retail payments in 2022, we see the impact on the volume and value of payments processed in the UK following the easing of Covid restrictions, compared to the final weeks of Lockdown 3.0 conditions in 2021.

Note: All data is publicly sourced and is the latest available: Pay.UK March 2022, Link April 2022 and UK Finance January 2022.

Source: Pay.UK Limited

Bacs Direct Debit and Direct Credit

In the 12 months to the end of March 2022 we see that:

  • Bacs Direct Credit volumes have decreased by 1% (12 months to February unchanged)
  • Bacs Direct Debit volumes have increased by 3% (12 months to February increased by 4%)
  • Total Bacs volumes have increased by 2% (12 months to February increased by 2%)
  • Bacs Direct Credit values have increased by 4% (12 months to February increased by 3%)
  • Bacs Direct Debit values have increased by 10% (12 months to February increased by 10%)
  • Total Bacs values have increased by 6% (12 months to February increased by 5%)

Volumes for Bacs Direct Credits in March 2022 decreased by 5% when compared with March 2021. This has been a similar trend seen in the last 12 months contributing now to an overall decrease of 1% in volumes for the year ending March 2022 when compared with the year ending March 2021. Since April 2021 when Lockdown 3.0 restrictions eased the volume of Bacs Direct Credits has been less than the equivalent month in the previous year in all months except April 2021 (increase of 0.5% ) June (increase of 2%) September (increase of 3%) and November (increase of 5%)

In contrast, growth in Direct Debit volumes year on year is still seen at 3% for the 12 months to March 2022 when compared with the 12 months to March 2021. As Direct Debits account for 70% of Bacs payment volumes, this has helped to maintain the growth seen over the year at 2% for the 12 months to March 2022 when compared to the 12 months ending March 2021.

The month on month value of Direct Credits has increased with the value processed in March 2022 being 11% greater than March 2021. Year on year growth has therefore increased to 4% for the 12 months ending March 2022. Similarly growth in the value of Direct Debits is again seen with the value processed in March 2022 being 7% greater than in March 2021.

CHAPS

In the 12 months to the end of March 2022 we see that:

  • CHAPS volumes have increased by 10% (12 months to February increased by 11%) 

This was made up of a 12% increase in retail / commercial based payments and a 6% increase in financial institution payments, compared to 13% increase and 6% increase respectively for the 12 months to February.

  • CHAPS values have decreased by 4% (12 months to February decreased by 6%)

This month the change was made up of an 3% decrease in retail / commercial based payments and a 4% decrease in financial institution based payments, compared to 4% decrease and 6% decrease respectively for the 12 months to February.

Retail / Commercial payment activity had fallen throughout 2020 recovering in December before falling back again in January 2021. Volumes have since recovered and March continued this trend with the volumes increasing by 4% in March 2022, compared with March 2021. Values also recovered increasing by 13% in March 2022 when compared with March 2021.

The underlying resilience in Wholesale payment volumes has continued with volumes in March 2022 increasing by 5% when compared with March 2021. Wholesale CHAPS values for March 2022 compared with February 2022 have also increased by 13%. This has reduced the year on year fall with Wholesale payment values decreasing by 4% for the year to March 2022 compared to the year to March 2021 – in February the reduction had been 6%.

Faster Payments

In the 12 months to the end of March 2022 we see that:

  • Single Immediate Payment volumes have increased by 22% (12 months to February 23%)
  • Total Faster Payment volumes have increased by 21% (12 months to February 22%)
  • Single Immediate Payment values have increased by 25% (12 months to February 26%)
  • Total Faster Payment values have increased by 25% (12 months to February 26%)

Thus, the trend has continued in March with both volumes and values significantly ahead of 2021 levels. March 2022 saw an increase of 13% in the volume of Single Immediate Payments processed in the month compared to 2021 and 20% in the value of Single Immediate Payments.

The widespread use of faster payments is a digital payment habit that will be here to stay, reinforced throughout each lockdown and with volumes and values continuing to increase month on month. The trajectory has flattened a little when similar conditions have been in place year on year – but the overall increase does not look likely to be changing any time soon.

Cheques

In the 12 months to the end of March 2022 we see that:

  • Cheque volumes have decreased by 12% (12 months to February 13%).
  • Cheque values have decreased by 1% (12 months to February 3%).

Volumes processed by the Image Clearing System in March were 13% lower than during March 2021 and values 10% lower. Although volumes are falling as many have undoubtedly switched to digital payment options, there is an underlying level of usage which continues to be seen in this method of payment.

With volumes of digital payments continuing to increase, the share of legacy payments within the total continues to fall. For the twelve months to March 2021 the volume of Cheque payments accounted for 2% of the total (for Bacs/CHAPS/Faster payments and Image Clearing System) falling to 1.4% in March 2022.

Key observations for the week ending 24 April 2022:

The volume of ATM Transactions decreased by 29% when compared to the final week before the first COVID lockdown.

  • The volume of ATM transactions decreased by 3% when compared to the previous week in 2022.
  • The volume of ATM transactions increased by 2% when compared to the equivalent week in 2021.
  • The volume of ATM transactions increased by 34% when compared to the equivalent week in 2020.

Last week there was a total of 30.0 million ATM transactions which represents a decrease of 1.0 million ATM transactions over the previous week.

In 2022, there was an increase of 0.7 million transactions or 2% when compared with the equivalent week in 2021.

Volumes in 2022 have been consistently greater than 2021 reflecting the differing conditions across the two years with 2021 being in Lockdown but restrictions easing and then mandatory requirements being removed completely in 2022. In the last week with the Lockdown in 2021 drawing to an end which led to a peak in activity the gap has now narrowed further to a difference of just 2%.

Both years remain well ahead of 2020 although again usage across all 3 years is likely to converge from the Summer reflecting the lifting of conditions in 2020 at that time.

Source: LINK

Through Lockdowns to Plan B, Plan A and now living with Covid:

This graph shows the impact on ATM Transactions throughout the first year of lockdowns in 2020 and initially at the beginning of 2021 with Lockdown 3.0. This was followed by a gradual increase in volumes in 2021 as restrictions eased throughout the Summer.

From the Summer months onwards activity across both 2020 and 2021 was very closely matched with the exception of the comparison with Lockdown 2.0 in November 2020.

In the first few weeks of 2022 the volume of ATM Transactions continued to track above 2021 but initially well below the pre-pandemic levels seen in 2020. However, since the end of March overall weekly volumes of ATM transactions have been above both 2021 and 2020 given the lockdown restrictions in place for the equivalent weeks in both years.

The graphs for 2021 and 2022 are now beginning to merge as restrictions were reduced in April 2021 and lifted further in May 2021. As can be seen from the graph below the volume of transactions in 2022 is likely to remain above those for the equivalent weeks in 2020 until the end of July when the ‘Eat out to help out’ scheme boosted trading in 2020 after the first Lockdown.

Source: LINK

With such a sharp drop in ATM transactions during 2020 a further significant shift from cash to digital may have been the logical expectation for 2021 but the volume of ATM transactions remained remarkably consistent once restrictions were lifted.

Thus, although we are unlikely to see the volume of ATM Transactions return to pre-pandemic levels, a considerable number are still reliant on or are choosing to rely on traditional payment methods including cash.

‘Cash is still vital to so many people,’ says Nick Quin, head of financial inclusion at cash machine network Link.  ‘Millions of people are choosing new ways to pay but, last year, on average, every adult in the UK still withdrew almost £1,500 from cash machines across the country.’

This is reflected in the consistent underlying level of ATM cash transactions seen as restrictions were lifted during 2021 and we expect to see a similar underlying volume of ATM transactions throughout 2022.

For more information visit our: ATM Tracker.

Debit and Credit Cards

Source: UK Finance

The UK Finance Update for January 2022 reports:

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

  • There were 1.7 billion debit card transactions in January, 37 per cent more than in January 2021 and 15.5 per cent more than January 2020. The total spend of £57.4 billion was 14.8 per cent higher than January 2021 and 3.4 per cent higher than January 2020.
  • There were 292.4 million credit card transactions in January, 47.9 per cent more than in January 2021 and 2.6 per cent more than January 2020. The total spend of £16.2 billion was 51.6 per cent higher than January 2021 but 6 per cent lower than in January 2020.
  • Outstanding balances on credit card accounts have grown by 3.8 per cent over the twelve months to January.

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 January, 42.8 per cent more than in January 2021 and 9.2 per cent more than January 2020. The total spend of £66.1 billion was 24.3 per cent higher than January 2021 and 11.3 per cent higher than January 2020.
  • Contactless payments accounted for 55 per cent of all credit card and 69 per cent of all debit card transactions.
  • There were 1.2 billion contactless card transactions in January, 78.7 per cent more than the 645 million in January 2021 and 31.2 per cent more than the 878 million in January 2020. The total value of contactless transactions was £16.3 billion in January, a 102.9 per cent increase on £8 billion in January 2021 and 97.2 per cent increase on £8.3 billion in January 2020.
  • The number of contactless credit card transactions was 112.8 per cent higher than January 2021 and 17.9 per cent higher than January 2020. The number of contactless debit card transactions was 74.5 per cent higher than January 2021 and 33.5 per cent higher than January 2020.

Current Account Switch Service

Monthly data: 2021:

Source: Pay.UK

Monthly data 2022

Source: Pay.UK

A total of 8.0 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.

As restrictions eased this increased again between February 2021 and March 2021 – from 42398  to 63724. The number of switches had increased again in November but reduced again in December due to usual seasonal fall as well as the impact from increased restrictions. Overall though the total number of switches increased by 36302 in Q4 2021 compared with Q3.

The differing conditions were still evident in the first two months of 2022 with the number of switches significantly ahead of 2021. Activity was beginning to increase in March 2021 but numbers were still subdued compared to the current year – 62632 in March 2021 compared to 77542 in March 2022.

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 in the rise of both the volume and value of single immediate faster payments.

The pandemic hastened the fall in cheque volumes and ATM cash transactions during the first lockdowns in 2020. The volume of cheques processed continues to fall with volumes in March 2022 compared to March 2021 showing a fall of 13%. Values though had been more resilient although the value processed in March 2022 was 10% lower than March 2021 which is a greater fall than in recent months. However despite the move to digital payments there remains an underlying level of usage for those who prefer or need this payment method for household or business use.

ATM cash transactions had been tracking ahead of the early weeks in 2021 as usage in the current year is stable but had fallen back in the Lockdown conditions in 2021. With Lockdown conditions now easing in the equivalent weeks in 2021 the gap is now very narrow. Again therefore, ATM Transaction Volumes are remaining at a consistent level reflecting the level of cash usage for those who choose to or need to rely on cash.

Nevertheless, with the overall growth in the volume and value of digital and contactless payments, we expect to see the share of these legacy payment methods within overall activity to continue to decline.

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