Payments Tracker

In this eighth round up of retail payments in 2022, we see the impact on the volume and value of payments processed in the UK as we ‘live with Covid’ with the comparison now with similar conditions in the equivalent months in 2021 as restrictions had been lifted at the end of Lockdown 3.0.

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

Source: Pay.UK Limited

Bacs Direct Debit and Direct Credit

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

  • Bacs Direct Credit volumes have increased by 0% (12 months to June increased by 0%)
  • Bacs Direct Debit volumes have increased by 3% (12 months to June increased by 3%)
  • Total Bacs volumes have increased by 2% (12 months to June increased by 2%)
  • Bacs Direct Credit values have increased by 2% (12 months to June increased by 2%)
  • Bacs Direct Debit values have increased by 7% (12 months to June increased by 7%)
  • Total Bacs values have increased by 4% (12 months to June increased by 3%)

Volumes for Bacs Direct Credits in July 2022 increased by just 0.2% when compared with July 2021. As expected, with similar conditions now in place, ongoing volumes are closely in line across the two years.

Growth in Direct Debit volumes year on year is still seen, remaining at 3% for the 12 months to July 2022 when compared with the 12 months to July 2021. As Direct Debits account for 70% of Bacs payment volumes, this has helped to maintain the overall growth seen over the year although there is still a slight reduction to 2% for Total volumes when compared with the year ending July 2021.

Year on year growth for the value of Bacs Direct Credits has still fallen back slightly to 2% for the 12 months ending July 2022. However the value of Bacs Direct Credits processed in the month itself has recovered increasing by 5% for July 2022 when compared with July 2021.

Growth in the value of Direct Debits is also seen although at a lower rate with the value processed in July 2022 again being just 5% greater than in July 2021.

CHAPS

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

  • CHAPS volumes have increased by 7% (12 months to July increased by 7%) 

This was made up of an 8% increase in retail / commercial based payments and a 6% increase in financial institution payments, compared to 7% increase and 6% increase respectively for the 12 months to June.

  • CHAPS values have increased by 5% (12 months to June increased by 2%)

This month the change was made up of an 5% increase in retail / commercial based payments and a 5% increase in financial institution based payments, compared to 2% increase for both for the 12 months to June.

Retail / Commercial payment activity had fallen throughout 2020 recovering in December before falling back again in January 2021. Volumes had since recovered although for June they decreased by 7% when compared with June 2021. Recovery is again seen in July with volumes increasing by 8% when compared with July 2021. Values also recovered with the increase in July 2022 being18% when compared with July 2021.

The underlying resilience in Wholesale payment volumes has continued although volumes in July 2022 increasing by just 4% when compared with July 2021. Wholesale CHAPS values for July 2022 compared with July 2021 have also increased, this month by 9%. Overall this has continued to lead to a year on year increase In values with Wholesale payment values increasing by 5% for the year to July 2022 compared to the year to July 2021.

Faster Payments

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

  • Single Immediate Payment volumes have increased by 18% (12 months to June 18%)
  • Total Faster Payment volumes have increased by 17% (12 months to June 17%)
  • Single Immediate Payment values have increased by 23% (12 months to June 22%)
  • Total Faster Payment values have increased by 21% (12 months to June 21%)

Thus, the trend has continued in July with both volumes and values ahead of 2021 levels. July 2022 saw an increase of 14% in the volume of Single Immediate Payments processed in the month compared to 2021 and 27% 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 has flattened 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 – particularly with inflationary pressures also having an impact on the value of payments processed.

Cheques

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

  • Cheque volumes have decreased by 15% (12 months to June 15%).
  • Cheque values have decreased by 8% (12 months to June 8%).

Volumes processed by the Image Clearing System in July were 19% lower than during July 2021 with values also decreasing by 13% in the month. 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 July 2021 the volume of Cheque payments accounted for 1.6% of the total (for Bacs/CHAPS/Faster payments and Image Clearing System) falling to 1.3% for the 12 months to July 2022. For the month of July itself the percentage had fallen further to 1.2%

Weekly ATM value and volume figures 21 August 2022.

Key observations for the week ending 21 August 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 was unchanged when compared to the previous week in 2022.
  • The volume of ATM transactions decreased by 3% when compared to the equivalent week in 2021.
  • The volume of ATM transactions decreased by 4% when compared to the equivalent week in 2020.

Last week there was a total of 30.3 million ATM transactions which represents no change in the ATM transactions over the previous week.

In 2022, there was an decrease of 0.9 million transactions or 3% when compared with the equivalent week in 2021.

In the first few months of the year, volumes in 2022 were consistently greater than 2021 reflecting the differing conditions across the two years. The gap then narrowed as restrictions eased from April 2021 reflecting similar conditions across the two years.

Similarly the volume of ATM transactions has been greater in 2021 and 2022 than 2020 since March when we entered Lockdown 3.0

Last week, the volume of Transactions was again below 2020 as that year was boosted from the first week of the Eat Out to Help out Scheme following the relaxation of the restrictions after the first Lockdown. For the second week it was also just below 2021 as well as activity continued to recover last year throughout the Summer months.

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. Since the end of March, the overall weekly volume of ATM transactions has been above both 2021 and 2020 given the lockdown restrictions in place for the equivalent weeks in both years.

From mid April the graphs for 2021 and 2022 were beginning to merge as restrictions were reduced in April 2021. Apart from a spike over the early May bank holiday the gap is continuing to narrow following the further easing of restrictions which occurred in May last year.

The volume of transactions in 2022 has remained 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 have now merged and are expected to be in line over the Summer months with the volume in 2022 for the second week just dipping below that seen in the previous two years.

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.

This consistency has continued into 2022 and as we approach the Summer months the graphs showing the Volume of ATM transactions across the three years have merged as expected reflecting the easing of restrictions and similar conditions in place.

This shows that 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. Many are also turning to cash to help them budget as they manage the cost of living crisis.

‘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 with the trends seen to date this year, we continue to 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 May 2022 reports:

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

  • There were 2 billion debit card transactions in May, 12.9 per cent more than in May 2021. The total spend of £60.8 billion was 1 per cent higher than May 2021.
  • There were 357.4 million credit card transactions in May, 26.9 per cent more than in May 2021. The total spend of £19.9 billion was 33.1 per cent higher than May 2021.
  • Outstanding balances on credit card accounts have grown by 9.6 per cent over the twelve months to May.

Card transactions made in the UK by cardholders from both the UK and from overseas countries:

  • There were 2.1 billion debit and credit card transactions in the UK in May, 17 per cent more than in May 2021. The total spend of £74.6 billion was 9.1 per cent higher than May 2021.
  • Contactless payments accounted for 60 per cent of all credit card and 74 per cent of all debit card transactions.
  • There were 1.5 billion contactless card transactions in May, 34 per cent more than the 1.1 billion in May 2021. The total value of contactless transactions was £22 billion in May, a 61.2 per cent increase on £13.7 billion in May 2021.
  • The number of contactless credit card transactions was 52.5 per cent higher than May 2021. The number of contactless debit card transactions was 31.4 per cent higher than May 2021.

Current Account Switch Service

Monthly data: 2021:

Source: Pay.UK

Monthly data 2022

Source: Pay.UK

A total of 8.2 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.

In January 2021, Lockdown 3.0 was clearly impacting as the number of switches was the fourth lowest over the previous 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. This trend continued with the total number of switches increasing 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.

Since April the similarity in conditions across the two years continues to be evident with volumes more in line across the two years and indeed falling back in July 2022 with the number of switches being 56060 compared to 60146 in July 2021.

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 July 2022 compared to July 2021 showing a fall of 19%. Despite the move to digital payments there is still 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 eased in the equivalent weeks in 2020 and 2021 the gap had narrowed and at present, although tracking closely, 2022 is marginally below the previous two years. However, 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.

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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