Payments Tracker

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

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

Source: Pay.UK Limited

Bacs Direct Debit and Direct Credit

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

  • Bacs Direct Credit volumes have increased by 1% (12 months to September increased by 1%)
  • Bacs Direct Debit volumes have increased by 3% (12 months to September increased by 3%)
  • Total Bacs volumes have increased by 3% (12 months to September increased by 2%)
  • Bacs Direct Credit values have increased by 3% (12 months to September increased by 2%)
  • Bacs Direct Debit values have increased by 8% (12 months to September increased by 8%)
  • Total Bacs values have increased by 4% (12 months to September increased by 3%)

Volumes for Bacs Direct Credits in October 2022 increased by 2% when compared with October 2021. With similar conditions still in place, ongoing volumes remain broadly 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 October 2022 when compared with the 12 months to October 2021. As Direct Debits account for 70% of Bacs payment volumes, this has helped to maintain the overall growth seen over the year with overall volumes increasing by 3% when compared with the year ending October 2021.

Year on year growth for the value of Bacs Direct Credits has Increased back to 3% for the 12 months ending October 2022. The increase in the value of Bacs Direct Credits processed in the month itself was 8% for October 2022 when compared with October 2021 with inflationary increases perhaps starting to impact.

Growth in the value of Direct Debits is again seen this month with the value processed in October 2022 being 7% greater than in October 2021 – however inflationary pressures could also be a contributing factor here.

CHAPS

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

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

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

  • CHAPS values have increased by 13% (12 months to September increased by 9%)

This month the change was made up of a 16% increase in retail / commercial based payments and a 12% increase in financial institution based payments, compared to 10% increase for retail / commercial based payments and a 9% increase in financial institution based payments for the 12 months to September.

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. A recovery is again seen in October with volumes increasing by 10% when compared with October 2021. Values also significantly recovered with the increase in October 2022 being 52% when compared with October 2021.

The underlying resilience in Wholesale payment volumes has continued with volumes in October 2022 increasing by 10% when compared with October 2021. Wholesale CHAPS values for October 2022 compared with October 2021 have also significantly increased, this month by 34%. Overall this has continued to lead to a year on year increase In values with Wholesale payment values increasing by 12% for the year to October 2022 compared to the year to October 2021.

Faster Payments

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

  • Single Immediate Payment volumes have increased by 19% (12 months to September 18%)
  • Total Faster Payment volumes have increased by 17% (12 months to September 16%)
  • Single Immediate Payment values have increased by 26% (12 months to September 24%)
  • Total Faster Payment values have increased by 24% (12 months to September 22%)

Thus, the trend has continued in October with both volumes and values ahead of 2021 levels. October 2022 saw an increase of 24% in the volume of Single Immediate Payments processed in the month compared to 2021 and 40% 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 October 2022 we see that:

  • Cheque volumes have decreased by 13% (12 months to September 14%).
  • Cheque values have decreased by 7% (12 months to September 8%).

Cheque volumes processed by the Image Clearing System in October were 15% lower than during October 2021 with values also decreasing by 3% 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 October 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 October 2022. For the month of October itself the percentage had fallen to 1.2%

Weekly ATM value and volume figures 20 November 2022.

Key observations for the week ending 20 November 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 8% when compared to the previous week in 2022.
  • The volume of ATM transactions decreased by 4% when compared to the equivalent week in 2021.
  • The volume of ATM transactions increased by 12% 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 2.7 million ATM transactions over the previous week.

In 2022, there was a decrease of 1.2 million transactions or 4% when compared with the equivalent week in 2021.

During the week ending 13 November many people received their cost of living payments from the Government which led to a spike in ATM usage and withdrawals.

Graham Mott, Director of Strategy, LINK said at the time: “This week has been much busier than expected for LINK cash machines. The middle of November is normally pretty quiet, often not helped by the weather, but this week has seen as real boost to cash as consumers get their cost of living payments. We may well see some more spikes in ATM use going forward as more payments are due before Christmas.”

For last week the volume of ATM transactions are back to normal and once again tracking below last year – either reflecting once again the underlying trend or many still had funds from the previous week.

Both 2022 and 2021 remain ahead of 2020 – this is due to the lockdown conditions which were re-introduced in November 2020 and the gap is expected to narrow again when restrictions in 2020 were once again lifted.

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 of the previous 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 continued to narrow following the further easing of restrictions which occurred in May last year with the three graphs merging at the end of July.

Since the beginning of August the years have still been closely matched but the volume in 2022 has been tracking just below that seen in the previous two years apart from the larger gap which reflects the impact of the bank holiday for the Queen’s funeral in September.

There is currently a temporary divergence with 2020 as lockdown conditions were reimposed in November 2020 but it is likely that the gap will narrow again from December once conditions were lifted.

As mentioned above, there has been a spike in withdrawals following the receipt of the cost of living payments with the volume falling back again last week and this can clearly be seen in the graph below.

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 the graphs showing the volume of ATM transactions across the three years merged as expected during the Summer months reflecting the easing of restrictions in 2021 and 2020 and the similar conditions in place. Volumes have fallen back slightly since August compared to the previous two years but with a higher average amount withdrawn the overall value of ATM transactions has been more in line over the same period – with a boost seen in the week ending 13 November following receipt of the cost of living payments by 8 million households.

Thus 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. With the general trends seen to date this year, we continue to expect to see a similar underlying volume of ATM transactions throughout the remaining weeks of 2022 with a boost expected when each of the remaining cost of living payments are received before the end of the year.

For more information visit our: ATM Tracker.

Debit and Credit Cards

Source: UK Finance

The UK Finance Update for August 2022 reports:

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

  • There were 2.1 billion debit card transactions in August, 8 per cent more than in August 2021. The total spend of £64.1 billion was 4 per cent higher than August 2021.
  • There were 376.6 million credit card transactions in August, 12.5 per cent more than in August 2021. The total spend of £20.1 billion was 18.5 per cent higher than August 2021.
  • Outstanding balances on credit card accounts have grown by 11 per cent over the twelve months to August and 51.2 per cent of outstanding balances incurred interest compared to 53.7 per cent twelve months ago.

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 August, 7.1 per cent more than in August 2021. The total spend of £72.8 billion was 5.7 per cent higher than August 2021.
  • Contactless payments accounted for 62 per cent of all credit card and 75 per cent of all debit card transactions.
  • There were 1.5 billion contactless card transactions in August, 18.9 per cent more than the 1.3 billion in August 2021. The total value of contactless transactions was £22.8 billion in August, a 47.9 per cent increase on £15.4 billion in August 2021.
  • The number of contactless credit card transactions was 32.1 per cent higher than August 2021. The number of contactless debit card transactions was 17 per cent higher than August 2021.

Current Account Switch Service

Monthly data: 2021:

Source: Pay.UK

Monthly data 2022

Source: Pay.UK

A total of 8.5 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 is in evidence with volumes more in line across the two years. This has continued with the number of switches being 115721 in October 2022 compared to 93545 in October 2021 with incentives to switch undoubtedly boosting activity given the current impact from the cost of living crisis.

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 October 2022 compared to October 2021 showing a fall of 15%. However despite the move to digital payments and consequent reduction in volumes 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, volumes in 2022 are marginally below the previous two years – part from the recent boost seen from the cost of living payments received by 8 million households. Thus ATM Transaction Volumes remain at a relatively consistent level, reflecting the level of cash usage for those who choose to or need to rely on cash.

However, 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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