In this July round up of retail payments, as restrictions continue to ease, we see the impact on the volume and value of payments processed in the UK.

Note: All data is publicly sourced and is the latest available: Pay.UK June 2021, Link July 2021 and UK Finance April 2021.

Source: Pay.UK Limited

Bacs Direct Debit and Direct Credit

In the 12 months to the end of June 2021 we see that:

  • Bacs Direct Credit volumes have decreased by 2% (12 months to May decreased by 3%)
  • Bacs Direct Debit volumes have increased by 1% (12 months to May increased by 1%)
  • Total Bacs volumes have remained unchanged (12 months to May also unchanged)
  • Bacs Direct Credit values have increased by 3% (12 months to May increased by 1%)
  • Bacs Direct Debit values have decreased by 3% (12 months to May decreased by 6%)
  • Total Bacs values have increased by 1% (12 months to May decreased by 1%)

The recovery in volumes for Bacs Direct Credits has been sustained with the percentage volume reduction still unchanged.

The small growth in Direct Debit volumes year on year seen through 2020 has also continued with an increase of 1% recorded for the year to June 2021.

Overall Bacs volumes are now unchanged year on year and the downward trajectory in values over the 12 month period is decreasing. With restrictions continuing to ease, we are seeing a recovery in both volumes and values and we would expect this to continue as restrictions are eased further over the coming weeks.

CHAPS

In the 12 months to the end of June 2021 we see that:

  • CHAPS volumes have decreased by 1% (12 months to May decreased by 4%) 

This was made up of a 2% decrease in retail / commercial based payments and a 1% increase in financial institution payments, compared to 5% decrease and 2% increase respectively for the 12 months to May.

  • CHAPS values have increased by 1% (12 months to May increased by 4%)

This month the change was made up of an 7% increase in retail / commercial based payments and a 2% decrease in financial institution based payments, compared to 9% increase and 2% increase respectively for the 12 months to April.

Retail / Commercial payment activity had fallen throughout 2020 – however for the month of December volumes just crept ahead of December 2019. Volumes fell back again in January but have recovered since as overall activity has increased as restrictions have eased in 2021. This was again seen in June with volumes 32% ahead of June 2020.

The resilience in Wholesale payment volumes had continued throughout although values have decreased compared to 2020 for each month in the last quarter – this has now led to an overall fall in Wholesale values year on year.

Faster Payments

In the 12 months to the end of June 2021 we see that:

  • Single Immediate Payment volumes have increased by 26% (12 months to May 27%)
  • Total Faster Payment volumes have increased by 21% (12 months to May also 21%)
  • Single Immediate Payment values have increased by 24% (12 months to May 22%)
  • Total Faster Payment values have increased by 20% (12 months to May 20%)

Thus, the trend has continued in June with both volumes and values significantly ahead of 2020 levels – although the volume percentage increase has fallen by one percentage point; June 2021 saw an increase of 28% in the volume of Single Immediate Payments processed in the month compared to 2020 and 41% in the value of Single Immediate Payments. The increased use of faster payments seems to be a digital payment habit that will be here to stay, reinforced throughout each lockdown over the last 12 months and continuing as restrictions ease.

Cheques

In the 12 months to the end of June 2021 we see that:

  • Cheque volumes have decreased by 26% (12 months to May 27%).
  • Cheque values have decreased by 33% (12 months to May 38%).

Thus, despite the introduction of the image-based cheque clearing system, the volumes have continued to drop over the 12 month period. Volumes processed by the Image Clearing System in June were 14% lower than during 2020 although the value was 12% greater for the month. Therefore, although many have undoubtedly switched to digital payment options, there is some underlying resilience, particularly in the value of cheques processed, which continues to be seen in this method of payment.

LINK – ATM Withdrawals

Key observations for the week ending 18 July 2021

  • Last week the volume of ATM transactions decreased by 3% when compared to the previous week in 2021.
  • Last week the volume of ATM transactions decreased by 3% when compared to the equivalent week in 2020.
  • Last week the volume of ATM transactions decreased by 40% when compared to the equivalent week in 2019.

Thus ATM usage is now tracking very close to 2020 volumes, which is not unexpected as the equivalent period last year now reflects very similar conditions – i.e. non essential retail stores and indoor hospitality re-opened with social distancing requirements still in place.

Despite a further slight fall over the previous week, the overall pattern seen has been fairly consistent over the last few weeks in 2021, reflecting the constant level of restrictions remaining in place over this time.

Source: LINK

This next graph also reflects the initial impact from Lockdown 3.0 but then a gradual increase from January to March can be seen followed by the spikes at the end of March and in mid April as restrictions were eased at each of these stages.

We have now seen the actual results from this further relaxation in the hospitality sector. The spike at the beginning of May co-incided with good weather over the first bank holiday and whilst the results from the further easing mid May were perhaps dampened by the weather, a further spike occurred over the second bank holiday and weekly transactions have settled around this level.

As mentioned above, the year on year comparison for the first three weeks in July are interesting as over this time the conditions which will remain in place in 2021 are similar to those which were in place over the Summer of 2020. This allows a more direct comparison of cash activity across the 2 years. The activity has been closely matched but with the number of transactions in the last week just “crossing the line” and dropping below the previous year.

From 19th July we will see how the further removal of restrictions in 2021, particularly with the relaxing of social distancing requirements, affects overall activity and thus impacts the volume and value of cash transactions. However with many proceeding with caution, a significant boost to the overall level of activity is not expected to occur.

Source: LINK

If the volume of transactions remain in line or just ahead of 2020 then it continues to look likely that the same floor in the number of transactions seen in 2020 will be seen during 2021. Thus, whilst digital payment habits were reinforced during each lockdown, we continue to expect to see a consistent underlying level of cash usage throughout this year by those who need to rely on cash or by those who choose to rely on cash.

Rolling volume change (compared to 2020): 

  • w/e 11 July: +1%
  • w/e 18 July: -3%

Rolling value change (compared to 2020): 

  • w/e 11 July: +4%
  • w/e 18 July: -2%

For more information visit our: ATM Tracker.

Debit and Credit Cards

Source: UK Finance

The UK Finance Update for April 2021 reports:

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

  • There were 1.6 billion debit card transactions in April, 59.5 per cent more than in April 2020 and 1.4 per cent more than April 2019. The total spend of £57.3 billion was 31.6 per cent higher than April 2020 and 6.9 per cent higher than April 2019.
  • There were 258 million credit card transactions in April, 57.2 per cent more than in April 2020 but 14.4 per cent fewer than April 2019. The total spend of £13.7 billion was 58.6 per cent higher than April 2020 but 21.5 per cent less than April 2019.
  • Outstanding balances on credit card accounts have contracted by 11.6 per cent over the twelve months to April, 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 1.6 billion debit and credit card transactions in the UK in April, 76.4 per cent more than in April 2020 and 2.7 per cent more than April 2019. The total spend of £65.6 billion was 53.4 per cent higher than April 2020 and 11.2 per cent higher than April 2019.
  • Contactless payments accounted for 47 per cent of all credit card and 63 per cent of all debit card transactions.
  • There were 963 million contactless card transactions in April, 260 per cent more than the 267 million in April 2020 and 32.9 per cent more than the 725 million in April 2019. The total value of contactless transactions was £11.9 billion in April, a 135 per cent increase on £5 billion in April 2020 and 74.7 per cent increase on £6.8 billion in April 2019.
  • The number of contactless credit card transactions was 258 per cent higher than April 2020 and 7.3 per cent higher than April 2019. The number of contactless debit card transactions was 261 per cent higher than April 2020 and 37.3 per cent higher than April 2019.

Current Account Switch Service

This section will be updated when the latest monthly data is released.

Monthly data 2020:

Source: Pay.UK

Monthly data: 2021:

Source: Pay.UK

A total of 7.3 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. The number of total switches in Q1 2021 decreased by 51,297 compared to the previous quarter as social distancing measures were re-introduced across the U.K.

As restrictions have eased this increased again between February 2021 and March 2021 – from 42398  to 63724. The number of switches has fallen back slightly in May – but at 61446 this still equates to nearly double the number of switches when compared with January of this year.

A high number of switches for Small Business and Charity accounts had been seen in January and February. However, this had fallen back in March and April and the level in May remains at the more usual level of 5.7%

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 most clearly in the continued rise of both the volume and value of single immediate faster payments. Volumes and values of these payments have continued to increase in June 2021 compared to 2020 and we would expect this trend to continue as restrictions are lifted and overall activity increases.

The pandemic hastened the fall in cheque volumes and ATM cash transactions during 2020. The volume of cheques processed has continued to fall in 2021 although now by a lesser amount month on month – although annual cheque volumes have reduced by 26%, the reduction for June has only been 14% compared to 2020. As mentioned above, the value compared to the equivalent month in 2020 has actually increased as has been the case since March as restrictions have eased.

ATM cash transactions are currently tracking almost exactly in line with 2020 – not unsurprising as a similar level of restrictions have been in place across the two years and shows the persistent level of cash usage which remains for those who choose or need to rely on cash.

However the growth in the volume and value of digital and contactless payments are likely to outstrip any uplift in cheque and cash transactions and therefore we expect to see the share of these legacy payment methods within the overall activity to continue to decline.

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