In this November round up of retail payments, we see how the first national lockdown followed by an increasing level of local lockdowns continued to impact the volume and value and of payments processed in the UK.

Note: All data is publicly sourced and is the latest available: Pay.UK October 2020, Link November 2020 and UK Finance August 2020.

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Source: Pay.UK

Bacs Direct Debit and Direct Credit

In the 12 months to the end of October 2020 we see that:

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

Volumes for Bacs Direct Credits continue to be subdued for the 12 month period, with the first lockdown still impacting the year on year comparison; month on month volumes and overall value had increased after falling back in August – although it is likely that both will reduce again due to the increased national restrictions introduced again in November.

The small growth in Direct Debit volumes has continued although values continue to fall – with capital repayment holidays on many mortgage and finance schemes and indeed extended supplier credit likely still to be part of the answer here; with volumes still rising (albeit by a modest amount) it will be one to watch as normal payment arrangements resume.

Overall Bacs values and volumes are still on a slight downward trend – again likely to be a result of lower payment requirements caused by widespread local lockdowns and trading restrictions   

CHAPS

In the 12 months to the end of October 2020 we see that:

  • CHAPS volumes have decreased by 8% (12 months to September 7%) 

This was made up of a 11% decrease in retail / commercial based payments and a 3% increase in financial institution payments compared to 10% decrease and 4% increase respectively for the 12 months to September.

  • CHAPS values have increased by 8% (12 months to September also 8%)

This month the change was evenly spread across both payment types – an 8% increase in retail / commercial based payments and an 8% increase in financial institution based payments, compared to 6% and 9% respectively for the 12 months to September.

Whilst overall volumes and values for financial institution payments continue to increase this is flattening from the increases seen in earlier months – however as would be expected these payments have remained one of the most resilient during 2020.

Retail / Commercial payment activity continues to fall – albeit with a smaller number of higher value payments such that overall values continue to increase.  Once restrictions are lifted and commercial activity increases a further acceleration in overall values would be expected although timescales for recovery remain uncertain.

Faster Payments

In the 12 months to the end of October 2020 we see that:

  • Single Immediate Payments have increased by 23% (12 months to September also 23%)
  • Total Faster Payment volumes have increased by 16% (12 months to September also 16%)
  • Total Faster Payment values have increased by 7% (12 months to September 7%)

October was again a strong volume month for Faster Payments as monthly volumes continue above pre-Covid levels despite the probable impact from local lockdowns – for example the total number of Faster Payments processed in October 2019 was 219,988,000 compared to 258,301,000 in October 2020.

Cheques

In the 12 months to the end of October 2020 we see that:

  • Cheque volumes have decreased by 22% (12 months to September 19%).
  • Cheque values have decreased by 34% (12 months to September 27%).

Thus, despite the introduction of the image-based cheque clearing system, the volumes of cheques have continued to drop over the 12 month period, albeit month on month this has recovered since the lows of the first lockdown.    With local lockdowns and a further national lockdown together with a continued use of remote working even when a return to office life became possible, this trend is likely to continue.

LINK – ATM Withdrawals

Key observations for week ending 15 November:

  • Week ending 15 November saw a new low in weekly ATM transactions at 26.8m – the lowest weekly volume of ATM transactions since early summer.  This shows the effect of the latest lockdowns on ATM and cash use.
  • The value of ATM transactions on Saturday 14 November was down by 46% (compared to equivalent day in 2019).
  • Weekly ATM use has reduced by 43% (compared to equivalent week in 2019).

This is evidenced in the following trend charting the gradual small recovery during the year but a further impact from the local lockdowns and then the second national lockdown clearly seen in recent weeks.

Rolling volume change (compared to 2019): 

  • w/e 8 November 2020: -38%
  • w/e 15 November: -43%

Rolling value change (compared to 2019): 

  • w/e 8 November 2020: -30%
  • w/e 15 November: -36%

For more visit out: ATM Tracker.

Debit and Credit Cards

Source: UK Finance

The UK Finance Update for August 2020 reports:

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

  • There were 1.6 billion debit card transactions in August, 3.9 per cent more than in July and 2.5 per cent more than in August last year. The total spend of £58.4 billion was 1.2 per cent less than in July but 12.5 per cent higher than last August. 
  • There were 273 million credit card transactions in August, 4.7 per cent more than in July but 10 per cent fewer than in August last year. The total spend of £13.8 billion was 1.2 per cent less than in July and 18.4 per cent less than last August.
  • Outstanding balances on credit card accounts have contracted by 12.6 per cent over the twelve months to August, 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 1.2 billion debit and credit card transactions in the UK in August, 1.3 per cent fewer than in July and 27.7 per cent fewer than in August last year. The total spend of £51.6 billion was 3.8 per cent less than the previous month and 14 per cent less than last August. 
  • Contactless payments accounted for 45 per cent of all credit card and 62 per cent of all debit card transactions. 
  • There were 709 million contactless card transactions in August, 7 per cent more than in July but 2.3 per cent less than the 726 million last August. The total value of contactless transactions was £8.2 billion in August, a 3.1 per cent increase from July and a 19.3 per cent increase on £6.9 billion last August. 
  • The number of contactless credit card transactions was 14.6 per cent higher than in July but 17.2 per cent lower than last August. The number of contactless debit card transactions was 5.9 per cent higher than July and 0.4 per cent higher than last August. 

As lockdown restrictions continued to be eased in August, we saw record numbers of customers choosing to make contactless payments using debit cards.

Contactless card transactions using either debit or credit cards also increased compared to July, suggesting that consumers are taking advantage of the £45 contactless spending limit.

Meanwhile, the amount of spending on UK debit cards fell slightly in August following a record high in July but remained strong at £58.4 billion.

The percentage of credit card balances attracting interest and the annual growth rate of outstanding balances on credit cards continued to decline – the latter dropping by 12.6 per cent over the twelve months to August

Eric Leenders, Managing Director of Personal Finance, UK Finance

Current Account Switch Service

Monthly data 2020:

A total of 6.8 million current accounts have now been switched since the service was launched in September 2013.

Over the last twelve months 777,393 current account switches have been completed – a significant (COVID) reduction on the historic number of switches.

For more visit our: Current Account Switching Tracker.

Conclusion

In this fourth retail payments round up, the story of the increasing use of digital and contactless payments continues.  

The pandemic has hastened the fall in cheque volumes and cash transactions.   

Local lockdowns followed by the second national lockdown are only likely to reinforce these digital payment habits.

As overall activity continues to subdued, it will be interesting to see the effect on overall digital activity once restrictions are lifted.

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