Over the weekend i was reading the Payments UK World Class Payments report highlighting payments trends that are shaping how consumers around the world make payments. The report focuses on different payment methods in the UK and provides some interesting statistical comparisons with payment systems and payment processes around the world. The report puts the spotlight on the UK but does touch on the hot topics surrounding payments: customer protection, credit and debit cards, cash, cheques, automated payments and mobile payments. As i read the Payment UK report, i made the following brief notes focusing on the broad payments trends.
1. Key themes from the Payments UK report:
- Payments in the UK are described as world class
- The greatest advances in payments innovation are happening in emerging markets
- Some countries such as Denmark as moving towards a cashless society
- Mobile phone usage globally is resulting in the growth of various mobile money applications
2. Payments in the UK – “World Class Payments”
Payments UK highlights the following 13 key competencies across which the UK performs strongly:
- Real time balances
- Real time payments 24×7
- Confirmation of payee – enforcing the need for the recipient name, bank sort code and bank account number
- Request to pay – better control around the payment process
- Visibility of the payment from beginning to end
- Improved payment data
- Common standards that enable interoperability between stakeholders
- Switching accounts
- Collaboration around identity and fraud prevention
- Continued availability of existing payment services across new and developing platforms
- Separation of payment clearing and payment settlement
- Common access to payments infrastructure
- Efficient governance
3. Debit Card Payments Trends
- According to Payments UK debit cards are the most common type of card held globally
- Europe is a mature debit card market
- China and Japan have the most debit cards per head, followed by Australia, Netherlands and the UK
4. Credit Card Payments Trends
- Credit card use is driven by cultural preferences, and where popular through the availability of rewards, coupons and similar offers
- UK credit card market is the biggest in Europe, and the USA is the worlds largest credit card market
- Credit cards were the first card type introduced into the UK and USA – in the UK, debit card usage has outgrown credit card usage, in the USA credit card usage remains the most popular
5. Contactless Payments Trends
- About 10% of card payments in the UK are contactless
- Contactless enabled cards in circulation are most prevalent in Poland, Italy, Singapore, the UK and Australia
6. Prepaid Cards
- Based on information from Datamonitor the UK Payments report suggests that prepaid cards are most popular among the unbanked population
- In Europe Italy is the largest prepaid card market
7. Point of Sale (POS) Terminals
- In 2014 there were 1.7 million POS terminals in the UK, this figure is growing rapidly
- The trend shows that an increasing number of retailers, large (obviously) and small (this is a new and exciting market), are accepting card payments
- Interestingly low value payments that are traditionally made using cash, are now being made using card
8. Cash Machines
- The highest number of cash machines in western Europe can be found in Portugal, Spain and the UK
- Denmark, Sweden, Norway and the Netherlands have the least cash machines
9. Direct Debits
- Direct debits are mostly used to pay regular bills
- Direct debit payments are most popular and widely used per inhabitant in Germany, Netherlands, UK, France, Belgium
10. Electronic Credit Transfers
- Electronic credit transfers are on the up globally
- Electronic credit transfer payments are most widely used in Belgium, Netherlands, Switzerland, Sweden and Germany
- The Payments UK report outlines some country specific preferences, for example Sweden has a relatively low number of direct debits but high number of credit transfers due to the popularity of payments systems: Bankgirot and PlusGirot
- I didnt know this, but in the Netherlands you cant use your domestic debit cards online – online payments are made using iDeal, a direct bank to bank transfer
11. Cheque Payments Trends
- The number of cheques are most popular in the US, France, Canada, Singapore and the UK
- Although cheque usage in the US has fallen by 40% between 2010 and 2014, in Canada by a third and in Australia by 46%
- Overall there is a move away from cheques to direct debits and electronic transfers –
- Cheques tend to be most popular with small shops, sole traders and schools according to Payments UK
- There are several cheque imaging schemes out there – highlighted examples include the US, Germany, India, Singapore, Sweden and China
12. Mobile Payments Trends
- Smartphones are driving the fastest and most prolific advances in payments innovation
- Mobile payments refers to a mobile device used to make:
- Person to person (P2P) payments – for example using an app like Paym in the UK (3.2 million customers) and Swish in Sweden, m-Pesa is also highlighted as an example
- Contactless payments – the mobile device is the channel through which the contactless card transaction is made – examples include Apple Pay, Samsung Pay, Google’s Android Pay and NTT Docomo in Japan
- m-commerce payments – using the mobile to shop online! The report describes how PSD2 will potentially remove the need for cards and enable direct bank to bank account transfers. Solutions provided by TPP (Third Party Providers) will certainly keep payments Interesting…!