Payments Tracker

In this fifth 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 days of Lockdown 3.0 conditions in 2021.

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

Source: Pay.UK Limited

Bacs Direct Debit and Direct Credit

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

  • Bacs Direct Credit volumes have decreased by 1% (12 months to March decreased by 1%)
  • Bacs Direct Debit volumes have increased by 3% (12 months to March increased by 3%)
  • Total Bacs volumes have increased by 2% (12 months to March increased by 2%)
  • Bacs Direct Credit values have increased by 4% (12 months to March increased by 4%)
  • Bacs Direct Debit values have increased by 9% (12 months to March increased by 10%)
  • Total Bacs values have increased by 5% (12 months to March increased by 6%)

Volumes for Bacs Direct Credits in April 2022 increased by 6% when compared with April 2021. This mirrors 2021 when again the volume of Bacs Direct Credits was greater than the previous year – albeit last year this was only 0.5%.

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%) and now April 2022 (increase of 6%)

In contrast, growth in Direct Debit volumes year on year is still seen at 3% for the 12 months to April 2022 when compared with the 12 months to April 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 April 2022 when compared to the 12 months ending April 2021.

Year on year growth for the value of Bacs Direct Credits has remained at 4% for the 12 months ending April 2022. However the value of Bacs Direct Credits processed in the month itself fell back slightly by 0.5% for April 2022 when compared with April 2021.

Growth in the value of Direct Debits is again seen with the value processed in April 2022 being 6% greater than in April 2021.

CHAPS

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

  • CHAPS volumes have increased by 9% (12 months to March increased by 11%) 

This was made up of a 11% increase in retail / commercial based payments and a 5% increase in financial institution payments, compared to 12% increase and 6% increase respectively for the 12 months to March.

  • CHAPS values have decreased by 2% (12 months to March decreased by 4%)

This month the change was made up of an 1% decrease in retail / commercial based payments and a 2% decrease in financial institution based payments, compared to 3% decrease and 4% decrease respectively for the 12 months to March.

Retail / Commercial payment activity had fallen throughout 2020 recovering in December before falling back again in January 2021. Volumes have since recovered and April continued this trend with the volumes increasing by 4% in April 2022, compared with April 2021. Values also recovered increasing by 17% in April 2022 when compared with April 2021.

The underlying resilience in Wholesale payment volumes has continued with volumes in April 2022 increasing by 2% when compared with April 2021. Wholesale CHAPS values for April 2022 compared with April 2021 have also increased by 7%. This has further reduced the year on year fall with Wholesale payment values decreasing by 2% for the year to April 2022 compared to the year to April 2021 – in March the reduction had been 4%.

Faster Payments

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

  • Single Immediate Payment volumes have increased by 19% (12 months to March 22%)
  • Total Faster Payment volumes have increased by 19% (12 months to March 21%)
  • Single Immediate Payment values have increased by 24% (12 months to March 25%)
  • Total Faster Payment values have increased by 23% (12 months to March 25%)

Thus, the trend has continued in April with both volumes and values significantly ahead of 2021 levels. April 2022 saw an increase of 13% in the volume of Single Immediate Payments processed in the month compared to 2021 and 25% 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. Although the trajectory is flattening a little particularly when similar conditions have been in place, an overall significant increase year on year looks set to continue for some while to come.

Cheques

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

  • Cheque volumes have decreased by 14% (12 months to March 12%).
  • Cheque values have decreased by 3% (12 months to March 1%).

Volumes processed by the Image Clearing System in April were 17% lower than during April 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 April 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 April 2022.

Key observations for the week ending 15 May 2022:

The volume of ATM Transactions decreased by 27% when compared to the final week before the first COVID lockdown.

  • The volume of ATM transactions decreased by 1% when compared to the previous week in 2022.
  • The volume of ATM transactions increased by 6% when compared to the equivalent week in 2021.
  • The volume of ATM transactions increased by 27% when compared to the equivalent week in 2020.

Last week there was a total of 30.9 million ATM transactions which represents a decrease of 0.3 million ATM transactions over the previous week.

In 2022, there was an increase of 1.8 million transactions or 6% 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.

In the second half of April 2021, with restrictions at that time, this led to a spike in activity and the gap between 2021 and 2022 then narrowed to a difference of just 2%. However indoor hospitality did not return until the third week of May and the early May bank holiday failed to provide any further boost last year. In 2022 with all restrictions removed and warmer weather returning the gap over the bank holiday weekend widened with the volume of ATM Transactions at the highest level seen so far this year.

The volume and value of transactions has dropped back since the bank holiday weekend to normal mid-month levels so the gap between 2021 and 2022 has narrowed again. With just under £1.6bn withdrawn and just under 31 million transactions the underlying importance of cash continues to be seen – despite being well below pre-pandemic levels.

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 were beginning to merge as restrictions were reduced in April 2021. However with all restrictions removed this year, there has been a spike in the volume of transactions boosted by the early May bank holiday weekend.

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. All 3 graphs are expected to merge from that time.

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.

Although the volume of ATM transactions is currently tracking ahead of 2021 and 2020, due to the Lockdown restrictions in place in the previous 2 years, we expect the graphs to merge over the Summer months reflecting the similar conditions across the three years.

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 February 2022 reports:

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

  • There were 1.7 billion debit card transactions in February, 32.9 per cent more than in February 2021 and 15.1 per cent more than February 2020. The total spend of £54.5 billion was 11 per cent higher than February 2021 and 5.4 per cent higher than February 2020.
  • There were 284.1 million credit card transactions in February, 40.1 per cent more than in February 2021 and 2.8 per cent more than February 2020. The total spend of £15.8 billion was 43.8 per cent higher than February 2021 and 0.7 per cent higher than in February 2020.
  • Outstanding balances on credit card accounts have grown by 6.5 per cent over the twelve months to February.

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 February, 40.5 per cent more than in February 2021 and 10.5 per cent more than February 2020. The total spend of £62.9 billion was 20.4 per cent higher than February 2021 and 14.4 per cent higher than February 2020.
  • Contactless payments accounted for 57 per cent of all credit card and 71 per cent of all debit card transactions.
  • There were 1.2 billion contactless card transactions in February, 76.3 per cent more than the 668 million in February 2021 and 32.4 per cent more than the 889 million in February 2020. The total value of contactless transactions was £16.7 billion in February, a 102.6 per cent increase on £8.3 billion in February 2021 and 99.1 per cent increase on £8.4 billion in February 2020.
  • The number of contactless credit card transactions was 109.4 per cent higher than February 2021 and 23.3 per cent higher than February 2020. The number of contactless debit card transactions was 72.1 per cent higher than February 2021 and 33.9 per cent higher than February 2020.

Current Account Switch Service

Monthly data: 2021:

Source: Pay.UK

Monthly data 2022

Source: Pay.UK

A total of 8.1 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.

With restrictions reducing in April 2021 the closer similarity in conditions is now evident with switches in April 2022 just 3% ahead of April 2021 at 63642 compared to 62012 last year.

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 April 2022 compared to April 2021 showing a fall of 17%. Values had been more resilient although the value processed in April 2022 was 10% lower than April 2021 – the same reduction as in March 2022 compared to March 2021. It remains clear though that 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 has now narrowed. 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 the overall activity to continue to decline.

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