The state of pay 2019-2020 - Ipsos
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The state of pay
2019-2020
UK RESEARC H
S E P T E M B E R 2 0 19
T H E S TAT E O F PAY 2 0 19 –2 0 2 0 1
Contents
3 Foreword
5 Research approach
6 Executive summary
8 The rise of digital-only bank
11 Day-to-day account management
12 Financial education and literacy
14 Contactless payments
17 Mobile payments
18 Paying bills
20 Paying other people
22 The last bastion of cash
24 Being paid
27 Security and payment fraud
28 Open Banking
30 Social media
31 An appetite for innovation
32 Advancing authentication
34 Technical note and methodology
T H E S TAT E O F PAY 2 0 19 –2 0 2 0 2U K R ES EARCH
Foreword In 1968, as the Interbank Computer Bureau, we launched the UK’s first shared
electronic payment system with a secure, streamlined service using international
standards. When we began our story, it was with a mission to enable greater choice in
payments for UK people, businesses, Government and banks.
Today, Vocalink provides transaction switching, clearing and settlement for one of
the world’s busiest ATM networks comprising over 60,000 ATMs1; we run, maintain
and service the technical infrastructure that processes over 4.4 billion automated
payments annually on behalf of Bacs including over 90 percent of UK salaries, more
than 70 percent of UK household bills and almost all state benefits2; we manage the
infrastructure that powers Faster Payments — allowing consumers and businesses to
make real-time payments 24x7. And as we complete the migration of paper cheque
processing to the electronic Image Clearing Service, we are proud of the part we have
played in driving a fully digital UK payments infrastructure.
Now, as part of Mastercard, our ideas and innovations play out on an even bigger
stage. But our core purpose remains the same: to enable the frictionless flow of
payments for consumers, businesses, banks and governments. We believe thought
“We’ve been at leadership, proprietary research, market analysis and opinion sampling are central to
the heart of UK our offer.
payments for Vocalink began researching consumer attitudes and behaviours to payments and
over 50 years.” payment technologies in 2013 to help us better understand the needs of the people
and business owners that participate in the UK’s economy. We repeated our study
in 2015 and again in 2017 to chart the change over time. This research, conducted
in 2019, explores those same topics while unearthing additional insights into newer
trends, such as the rise of digital-only banks and the advent of Open Banking. We
also delve deeper into financial literacy and education — something we believe is vital
to ensure the sustainable growth of the global economy.
We travelled the length and breadth of the UK to gather a diversity of perspectives.
We’ve looked across the population – from Generation Z to over 75s and small
business owners. Our findings among these groups provide valuable insight into the
way people and organisations want to access and move their money.
This research serves a dual purpose of informing thinking across our industry and
driving our own innovation in the UK and beyond. I invite you to engage in the
discussion on the state of pay in the UK, and share your hopes and expectations for
how the UK payments landscape continues to evolve.
Gregor Dobbie
CEO of Vocalink, a Mastercard company
Join the conversation
1. LINK website vocalink.com/stateofpay
2. Bacs website #StateofPay
T H E S TAT E O F PAY 2 0 19 –2 0 2 0 3T H E S TAT E O F PAY 2 0 19 –2 0 2 0 4
U K R ES EARCH
Research approach
2,603 people surveyed, of which: Research aims:
• 2,002 UK adults aged 16-75, all are • To understand how the state of This study was commissioned by
current account holders and use a pay in the UK has changed in the Vocalink and was conducted by Ipsos
mobile phone regularly last two years MORI, a market research company.
• 301 UK adults aged 76+, all are • To explore behaviours and Please see technical note at the end of
current account holders and use a preferences among UK adults this report for information on the 2015,
mobile phone regularly with regards to banking and 2017 and 2019 state of pay research
payments methodologies.
• 300 users of banking or payment
services in a UK microbusiness • To highlight emerging trends, For the purposes of this report, we
and understand what UK adults will refer to UK adults aged 16-75 as
Focus groups in: and users of banking or payment ‘respondents’, and UK adults aged 76+
services in a UK microbusiness ‘respondents aged 76 and over’.
• London want from the next generation
of banking and payments
• Leeds
• Bristol
• Edinburgh
Definitions
Mobile payments Open Banking
A mobile payment is any payment made from or through Banks allowing customers (with their approval) to securely
a mobile phone. This could include phone-based contactless share their transaction data with approved third parties.
payment applications such as Samsung Pay or Apple Pay, even
though these usually work as proxies for credit or debit cards. Fintech/digital-only bank
A bank that provides all its banking facilities online and
Mobile payments also include buying anything via an app through app platforms on smartphones and tablets, with
or internet browser. This could be in-app purchases – such no physical branches. ‘Fintech’ refers to providers offering
as add-ons to games, Uber car bookings or car parking – or innovations in both financial services and technology. In this
shopping through a web browser on a mobile phone. report, we are specifically referring to the new wave of fintech
banks such as Monzo, Revolut and Starling, to name a few.
For the purposes of this paper, a payment made on a tablet These providers are frequently also digital-only.
would not be deemed a mobile payment.
Gig worker
Mobile banking The gig economy is a labour market characterised by short-
This means accessing and managing your bank accounts via term contracts or freelance work as opposed to permanent
a mobile phone via app or browser. For the purposes of this jobs. For the purposes of this research, we have defined a
paper, if a person accesses their account via a tablet or laptop gig worker as anyone that works on a casual or zero-hour
while out and about that would count as online banking rather contract, freelancers and self-employed workers that source
than mobile banking. work via a gig platform such as Uber or Task Rabbit. Please
note that there were only 160 respondents in this group.
T H E S TAT E O F PAY 2 0 19 –2 0 2 0 5E X ECU TIVE SU MMARY
The state of pay in the UK
2019–2020
When we began charting We’ve since witnessed a steady transition banks). But while many of the fintech
to digital means of managing money users participating in our focus groups
the state of pay in the and making payments. As the mobile wax lyrical about the superior customer
UK in 2013, we were on proposition matures, the industry is experience and ability to make payments
the frontier of the next moving beyond the traditional payments abroad with minimal or no fees, there’s
space to enable choice and innovation still a way to go before fintech providers
generation of payments. across the wider digital ecosystem. assure a broader audience they’re safe,
Our research focused on stable and responsible enough to compete
what were then considered Perhaps the biggest change of the past with established mainstream banks.
two years is the influx of new providers
nascent mobile payments (including digital-only banks, or ‘fintechs’) Online banking continues to be the most
and banking technologies. in payments. These new providers make used method for day-to-day account
up more than a tenth of new current management, and use of mobile banking
In 2015, our headline story was accounts opened in the last six months apps has continued to increase over
growing usage of mobile payments however, as we heard from participants time. At the same time, a steady number
in-store and online, most likely spurred in our focus groups, these are generally of respondents continue to bank ‘offline’
by a proliferation of smartphones and reserved as secondary accounts into — via telephone or in-branch at a bank
improved availability of contactless which they pay themselves a regular or Post Office — suggesting that while
acceptance infrastructure; in 2017, we allowance to help them control their day- use of online and mobile banking is on
concluded that mobile banking apps to-day spending more effectively. the rise, there is still an (albeit lower)
may be becoming more of a natural and appetite for more established methods.
accepted part of many respondents’ Fintech users tend to be younger,
relationship with their banks — the more likely to live in urban areas, and Many of the participants we spoke
‘new normal’. significantly more of them use mobile to in our focus groups told us that
payments (in comparison to current more should be done to promote
account holders with mainstream UK financial literacy, which they consider
T H E S TAT E O F PAY 2 0 19 –2 0 2 0 6a key requirement to improve financial paying for taxis and public transport, Over the past two years we have seen
capability. There’s a growing market and when donating to charity — where many respondents settle into new
of digital money management apps cash plays a significant role. routines. But following the introduction
and tools to help meet this need, but of Open Banking in January 2018 and
providing this training in schools — most We observed a significant regional other upcoming domestic initiatives set
focus groups participants agreed — is variation in the use of contactless to stimulate competition in financial
the best place to start. payments, with more respondents in services, the UK payments industry is
the South East or Greater London using facing a sea change once again. Its early
When it comes to making payments, contactless payments for small everyday stages, and the respondents we spoke
our 2019 research shows a continued purchases than those elsewhere. There to are understandably wary of anything
trend towards contactless payments. was also significant variation in use of that could compromise the security of
In fact, contactless cards are now the contactless payments across age groups their personal data, but driving greater
most used method of payment for small, with a significantly lower proportion awareness of the benefits will likely
daily purchases. Contactless mobile of respondents aged 65 or over using alleviate most concerns.
payments are also fast gaining ground contactless payments across a range
with use more than doubling since 2017. of payment scenarios. But while older Incumbent banks and established
It’s something we could have predicted, respondents tend to lag a little behind players like Mastercard and other global
but what’s perhaps less easy to predict the trend, the respondents aged 76 payment providers are best-regarded by
is the continued high use of cash too. and above we spoke to are defying respondents to secure their trust in new
We heard many times in our focus expectations in many other ways: payment solutions or financial services,
groups that participants value choice at they’re confident managing money, and but how will these organisations
the point of sale, some find using cash online is their most used method for leverage the opportunity to drive a more
makes it easier to track their spending everyday banking activities like checking frictionless future of payments? We’ll
and budget more effectively, and there balances and transferring money (ahead find out when we revisit the UK’s state
are certain scenarios — such as paying of telephone or in-branch banking). of pay in another two years’ time.
tradespeople and small businesses,
T H E S TAT E O F PAY 2 0 19 –2 0 2 0 7P E RSONAL BANK ING
The rise of digital-only banks
13%
of new accounts opened from Jan-
15%
of 25 to 34-year-olds hold an
1 in 3
people in the Greater London area
June 2019, were digital only banks account with a digital only bank is considering opening a digital-only
bank account
The influx of new providers opening a digital-only bank account What makes digital-only banks so
is highest in Greater London (17% attractive? In our focus groups, many
into the UK payments and own and 33% would consider). participants who owned a fintech
finance space is potentially account admired the intuitive user
one of the hallmarks of the A number of participants in our focus experience of digital-only bank apps,
groups claimed to have accounts with and said immediate push notifications
past two years. multiple fintech digital-only providers gave them greater visibility of their
either in cases where they share a joint finances and improved control. These
Digital-only fintech banks, including account with a partner or housemates, participants drew comparisons on
Monzo and Starling Bank, account or simply because they’re testing customer service, and said they liked
for over one in 10 (13%) new current different offerings before they commit. that they could contact a customer
accounts opened in the UK, in service assistant via email or in-app chat
the six months ending June 2019. ‘I use Revolut to send money to my quicker than phoning a traditional bank.
Other smaller but more ‘traditional’ brother who works all around the
providers (i.e. with a network of world — it’s easy and instant’ Most often, focus group participants
branches), including Nationwide, Leeds who owned a fintech account told us
TSB and Metro Bank account for that consideration of digital-only banks
21 percent of new current account The proportion of respondents who had been driven by recommendation by
openings, while the ‘Big Five’ and their already own or would consider a digital- friends or family. The incentive to ‘refer
subsidiaries account for 65 percent. only bank account is lowest among older a friend’ offered by many fintech banks
This proportion is down five percentage age groups. Ownership of a digital-only goes a long way too. Many of these
points from 2018, which might cause account among respondents aged 65 participants said they were encouraged
incumbent providers some concern.1 to 75 is three percent and four percent to open a fintech account before
among respondents aged 76 and over; travelling abroad in order to save on
According to this year’s survey, consideration is five percent and eight foreign transaction fees and continued
fifteen percent of respondents aged percent respectively. Alongside this, 82 using the account when they returned.
25 to 34 already have an account percent of respondents aged 65 to 75
with a digital-only bank (like Monzo have not considered opening an account ‘I use a pre-paid cash card when
or Starling), and about a third of with one of these providers. abroad. It is safer as I am not carrying
respondents (30%) aged 25 to 44 cash and it is easy to use, plus I have
say they are considering opening a ‘It saved the hassle of trudging down to the flexibility of being able to use cash
digital-only account, but haven’t yet. the bank with my son’s birth certificate if I need to’
The proportion of respondents who and whatever else — I did it all online’ Leeds
both currently own or would consider Edinburgh
T H E S TAT E O F PAY 2 0 19 –2 0 2 0 8P E RSONAL BANK ING
Fintech
customer profile
Household income Living in urban area Have credit card Have investments
£46K 66% 57% 27%
vs £33K average vs 56% average vs 48% average vs 17% average
Have savings Degree educated Average age
65% 50% 31 years
vs 57% average vs 27% average vs 48 years average
But despite their impressive growth, just Similarly, many of these participants felt ‘They could go belly up tomorrow’
24 percent of fintech bank accounts in this makes a fintech bank card safer to London
Great Britain are used as main current travel with.
accounts.2 Views expressed in our focus Security and integrity is an area
groups shed some light on why this is ‘It’s just a ‘holding cell’ in which fintechs can perhaps
the case: the majority of participants Edinburgh differentiate themselves in what’s
who owned a fintech account prefer becoming an increasingly saturated
to retain their bank account with a So, what’s preventing more respondents market for both personal and business
traditional provider for activities such from taking the plunge? Security is cited banking. Doing more to reassure
as receiving their salary and making as one of the biggest concerns: in our consumers around core transaction
larger or loan payments. They use their focus groups, general consensus among security, consumer protections and
fintech account for every day purchases participants was that fintech banks regulatory compliance (areas in
somewhat like a pre-paid card: they — being new and relatively untested — which traditional banks are perceived
transfer themselves an allowance at the weren’t a safe repository for all their to be stronger) could help fintech
beginning of every month, and use the money. A few failures and some negative banks transition from ‘secondary’
bank’s app to maintain an overview of customer reviews have done little to to ‘primary’ account providers.
their spending and help them budget. alleviate their worry.
1. Financial Research Survey (FRS) Current accounts opened in the last 6 months. Time period: 3 months ending June 2019. Base definition: GB adults aged 16+. Base
size: 2128. The ‘Big 5’ banks and their subsidiaries consist of: Barclays; Santander; HSBC/First Direct/M&S Bank; NatWest/RBS; Lloyds/Halifax/Bank of Scotland.
2. Financial Research Survey (FRS) Current accounts opened in the last 6 months. Time period: 3 months ending June 2019. Base definition: GB adults aged 16+. Base
size: 2128.
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How do you perform the following activity:
By telephone call or in branch3
Transferring money between my bank accounts
12%
13%
12%
Checking my bank balance
17%
16%
14% 2015 2017 2019
1. Financial Research Survey (FRS) Current account holders; Time period: 12 months rolling. Base definition: all current account holders. Base size: 58,272
2. ONS, Business activity size and location, via the NOMIS database (UK Business Counts variable)
3. Q: When it comes to your personal banking, in which of the following ways, if any, do you perform each of the following activities? Base definition: UK adults aged 16 to
75, all are current account holders and use a mobile phone regularly. (Base size: 2019 - 2002; 2017 - 1673; 2015 - 2664)
T H E S TAT E O F PAY 2 0 19 –2 0 2 0 10P E RSONAL BANK ING
Day-to-day account management
Online banking continues to that the proportion of respondents Many participants in our focus groups
performing everyday banking activities by who use the Post Office for personal
be the most used method telephone call or in-branch has remained banking agreed, noting: ‘it’s more
for day-to-day banking at a similar level over time. Around one convenient to walk to the local Post
activities, and use of mobile in eight respondents transfer money Office than try to find a parking space
between accounts either by telephone in town.’ Other participants felt the
banking has continued to call or by going in branch, and this has Post Office was a less intimidating
increase over time. been the case going back to 2015 (12% environment to perform banking
of respondents in 2019, 12% in 2017 and activities than a bank, which they
In our 2017 survey, three tenths of 13% in 2015). This suggests that while described as too clinical.
respondents (30%) said they used a use of online and mobile banking is on the
mobile banking app on their smartphone rise, there is still an (albeit lower) appetite ‘A bank can be intimidating, but a
to check their balance and a similar for offline personal banking methods. Post Office has more of a community
proportion again said they transferred feel. It’s the preferred option for
money between their accounts this way Security concerns and personal many of my clients’
(28%). It suggested mobile banking apps preference are the main barriers to Bristol
may be becoming more of a natural using a banking app on a smartphone
and accepted part of many people’s or tablet. When we asked respondents Looking more specifically at using the
relationship with their banks. not currently using a banking app for Post Office to manage current accounts,
Two years on, a significantly higher personal banking why this was the case, usage has increased over time. In 2019,
proportion of respondents are using a 41 percent said ‘I prefer other ways eight percent of GB adults used the
mobile banking app on their smartphone to do my personal banking’ while 39 Post Office to manage their current
to perform the same personal banking percent agreed ‘I don’t feel it’s secure to account — in comparison to six percent
activities versus 2017: checking their use a banking app’. in December 2016 and four percent in
balance (46% of respondents in June 2014.1 Could an increased use of
2019 compared to 30% in 2017) and Just under a fifth (19%) of respondents the Post Office for banking be linked
transferring money between their use the Post Office for everyday to a high volume of UK bank branch
accounts (35% of respondents in 2019 banking, and among respondents aged closures? In the four years from 2012 to
compared to 28% in 2017). Younger 76 and over, this grows to almost one 2018 around a fifth of bank and building
respondents (those aged 16 to 24) are in three (29%). When we probed why, society branches closed in London and
more likely to perform personal banking convenience came out top with 47 the south-west, just above a 17 percent
activities like this on their smartphones percent of respondents aged 16 to 75 nationwide average.2 The Post Office
(over other methods available), whereas who use the Post Office for everyday remains an important means for many
older respondents (those aged between banking agreeing it was ‘because there’s people in local communities to access
35 and 75) are more inclined towards a Post Office branch in a convenient their money and other banking services.
using a computer (versus a banking app location’ (an even higher proportion of
on a smartphone or other methods). respondents aged 76+ who use the Post
Office agree with this at 60%). Similarly,
In an age where the smartphone forms 35 percent of Post Office banking users
the basis of many interactions between aged 16 to 75 agreed it was ‘because
customers and service providers, my bank doesn’t have a branch in a
conducting every day banking activities convenient location’, and 32 percent
via mobile may be somewhat expected. ‘because I can do other things at the
But what’s perhaps less expected is same time’.
T H E S TAT E O F PAY 2 0 19 –2 0 2 0 11P E RSO NAL BANK IN G
Financial education and literacy
Could more be done ‘Nobody taught me about savings Of course, banks might take the
and loans. I learned the hard way’ responsibility upon themselves — as
to promote financial Leeds many already have. While the Bank
literacy and confidence of England is funding a new teaching
in managing money? Twenty-four percent of respondents say programme to give 11 to 16-year-olds
they have given financial advice about more skills to make financial decisions,
managing finances to friends and family, there are an increasing number of similar
Improving financial education and and 20 percent have recommended a initiatives across the age spectrum, from
literacy is high on the government’s financial product to friends and family. Lloyds Bank’s The M Word to Barclays’
agenda, and for good reason: Financial Those who have given financial advice Digital Eagles.
literacy gives people the power to make are significantly more likely to have given
the most of their money and have it to friends (47%) than parents (38%) This is where fintechs have an
the best possible financial wellbeing, or children (36%). Looking at younger opportunity to come into their own.
both now and in the future. But respondents in particular, almost two Thirty-one percent of respondents
only 36 percent of respondents who thirds (62%) of respondents aged 16 agree that ‘I prefer using technology to
participated in our survey feel they are to 34 who have given financial advice, manage my money’ demonstrating an
well-informed on financial matters. have done so to friends. There are appetite for tech solutions in personal
some potential benefits to discussing banking. Which tech tools are likely to
Respondents in lower income households financial matters with peers: several appeal? The transparency afforded by
are more likely to worry from payday participants in our focus groups felt banking apps that show payments and
to payday than other respondents: just that it’s a far easier conversation to balances in real-time; AI saving and
over half of respondents (53%) in lower have informally ‘in the pub, over a budgeting tools; and pre-paid cards for
income brackets (with a household beer’ and with people who are at a children with an accompanying parents’
income of up to £29,999 a year) agree similar stage in their lives and therefore app were all cited by many focus group
with the statement ‘worrying about sharing similar financial concerns.2 participants as useful tools to instil a
running out of money between paydays sense of financial discipline and improve
is stressful’. This is in comparison to 33 Around one in 10 (9%) of the parents financial literacy.
percent of respondents with a household we surveyed say they have educated
income of £75,000 or more per annum. their children about money. In our focus But many focus group participants
groups, consensus among participants wondered whether the increased
Similarly, just over half of respondents — parents and non-parents alike — was digitisation of money made it all seem a
aged 25 to 34 (54%) agree that they that responsibility for teaching young little intangible. Many of the parents we
feel stressed when worrying about people about spending and budgeting interviewed in the focus groups said they
making money last between paydays. fell to schools in the first instance. liked to teach their children the value
Respondents of retirement age (aged However, few of our focus group of money in physical form so they can
between 65 and 75) are the least likely participants felt schools — particularly better appreciate that when it’s gone,
of all respondents to agree they feel state schools — were doing enough. it’s gone.
stressed about this, with nine percent This was reflected in our survey data:
agreeing with the statement and 37 when asked ‘how did you learn about ‘I’ve bought my daughter a money box…
percent disagreeing.1 managing your personal finances?’ just I help her with counting up the coins so
one in 20 (5%) said that their school had she learns the value of saving’
taught them. Bristol
T H E S TAT E O F PAY 2 0 19 –2 0 2 0 12P E RSONAL BANK ING
1
3 agree that they feel well informed on financial
matters
2
people aged 25-34 agree that they worry
about running out of money between paydays
in
is stressful
20 say their school taught them about money
management
10 say that they taught their children about money
management
Over 75s: Defying expectations3
Our research suggests that older people — aged 76 and over — may well defy expectations when it comes to their behaviour and
attitudes towards finances, payments, and technology.
Some highlights about respondents aged 76 and over:
They’re financially-savvy Many choose to bank online
89% 49% 71% 79%
agree they are in think they are transfer money check their balance
control of their well-informed on between accounts online
personal finances financial matters online
57% own a smartphone, but... They have embraced contactless payments
16% 16% 49% 65%
prefer using feel left behind use contactless agree that
technology to by financial to pay for small contactless
manage their technology daily purchases payments are
finances advances (under £30) a convenient
way to pay
1. Income up to £29,999 a year
2. 53% of 16–24-year-olds and 52% of 25–34-year-olds
3. Base definition: UK adults aged 76 and over, all are current account holders and use a mobile phone regularly. (Base size: 301)
T H E S TAT E O F PAY 2 0 19 –2 0 2 0 13PAY I NG AND BEING PAI D
Contactless payments
Contactless is the most roll-out of contactless cards and Others, especially older focus group
contactless acceptance devices, plus participants, said they find it easier
used method of payment consumers becoming increasingly to manage their money when paying
for small daily purchases. comfortable and familiar with making with cash as it’s easier to keep track
contactless payments on their phones.1 of their spending.
The past ten years has seen significant In fact, some participants in our focus
change in payments. As modern groups struggled to remember the last When it comes to tracking spending,
economies move decisively away from time they’d made a payment using not being able to see pending payments
cash and cheques, digital payment Chip & PIN. accounted for in their available balance
experiences have evolved considerably is a potential pain point, with 68 percent
too — from swipe and sign to Chip & ‘I’ve probably forgotten my PIN by of respondents agreeing they like being
PIN, the in-store checkout experience is now because it’s been so long’ able to see, up to the minute, where their
now faster, simpler… and increasingly Leeds money is going. Worries about losing
contactless. control of spending was a sentiment
Initially many of our respondents echoed by many focus group participants
When we conducted this survey in 2015, held reservations around contactless who told us that contactless payments
contactless card payments were used payments: fifty-eight percent agreed make them less disciplined about how
by 15 percent of respondents to pay for that they worried about the security of much and how often they spend.
every day purchases under £30; in our contactless payments when they first
2017 survey, it had more than doubled heard about them. But this has not ‘Sometimes you get desensitised to
to 34 percent. Two years later, it’s nearly proven a complete barrier, as thirty-nine how much you are spending’
doubled again. In 2019, 64 percent percent of respondents agree that while Bristol
of respondents make contactless they are concerned about the security
payments using a credit or debit card for of contactless payments they use them This perhaps explains why debit cards
purchases under £30. anyway. And three quarters (74%) of are more commonly used for contactless
respondents agree that contactless payments — given they’re limited to
Alongside this, 10 percent of respondents payments are a convenient way to pay. however much the person has in their
pay for small purchases via a contactless current account. But use of credit card
payment using their smartphone — an Somewhat contrary to expectation, contactless is quickly closing the gap with
increase of well over double the number the increased use of contactless card debit cards: the proportion of GB adults
of respondents in 2017 (3%). Young and mobile payments has not been making contactless credit card payments
respondents have the highest usage, with met by a corresponding decrease in use has almost doubled in the past two years
around one in six of those aged 16 to 24 of cash. Sixty percent of respondents from 27 percent at the start of 2017 to
(15%) and around one in seven of those use cash for small every day purchases 50 percent in June 2019.2
aged 25 to 35 (13%) making contactless (under £30) — down just four percentage
payments with their smartphone. A points in two years (use of cash for ‘It seems like free money when you pay
higher proportion of respondents aged small purchases was 64% in 2017). And contactless… it’s just tap, tap, tap’
25 to 34 also use contactless via a when paying the bill in a restaurant or Leeds
credit or debit card (73% compared to bar, use of cash has increased: from 47
64% among all respondents). When it percent among respondents in 2017 to Most respondents agree the £30 limit for
comes to paying in a restaurant or bar, 55 percent in 2019. a contactless card payment is ‘about right’
contactless debit or credit cards are used (69%), but few focus group participants
by 53 percent of respondents — up 21 Why? Sixty-eight percent of respondents were aware of the extended payment limit
percentage points from 2017 (32%). agree that they like having the option for Apple Pay and other mobile wallets.
to pay using cash. When we asked Perhaps, given how liberally our focus
As suggested by recent findings from participants in our focus groups ‘why group participants feared they spend
UK Finance, the growth of contactless cash?’, many told us they had a nostalgic when using contactless, it’s better they
payments is likely driven by continued attachment to carrying notes and coins. don’t know.
T H E S TAT E O F PAY 2 0 19 –2 0 2 0 14PAY I NG AND BEING PAI D
How do you currently pay for small daily purchases
(under £30)? Credit/debit card contactless:3
2015 2017 2019
17% 34% 64%
68% like being able to see, up to the
minute, where their money is going 68% agree that they like having the
option to pay using cash
83% 85%
67%
60%
55%
Use card
Use cash
7%
When making small every When paying at a bar When paying for larger
day purchases (under £30)4 or restaurant purchases, such as electronics
1. UK Finance ‘UK payment markets summary 2019’
2. Financial Research Survey (FRS). Respondents with a current account/credit card; Time period: 3 months rolling
3. Q: How do you currently pay in each of the following situations, if at all? Please select all that apply. Paying for small daily purchases (under £30). Base definition: UK
adults aged 16 to 75, all are current account holders and use a mobile phone regularly. (Base size: 2019 - 1992; 2017 - 1899; 2015 - 4227)
4. Q: How do you currently pay in each of the following situations, if at all? Please select all that apply in each situation. Base definition: UK adults aged 16 to 75, all are
current account holders and use a mobile phone regularly. (Base size: 2002)
T H E S TAT E O F PAY 2 0 19 –2 0 2 0 15PAY I NG AND BEING PAI D
Paying for small daily purchases under £30
via contactless smartphone payment:2
2017
2019
3% 10%
Paying for larger expenses like airline tickets
or electronics:3
3x
increase in payments using
31%
increase in payments online
a mobile phone browser using a computer or tablet
1. 60% among 45 to 54s, 62% among 55 to 64s, and 60% among 65 to 75s
2. Q: How do you currently pay in each of the following situations, if at all? Please select all that apply. Paying for small daily purchases (under £30). Base definition: UK
adults aged 16 to 75, all are current account holders and use a mobile phone regularly. (Base size: 2019 - 1992; 2017 - 1899)
3. Q: How do you currently pay in each of the following situations, if at all? Please select all that apply. Paying for larger expenses like airline tickets or electronics. Base
definition: UK adults aged 16 to 75, all are current account holders and use a mobile phone regularly. (Base size: 2019 - 1852; 2017 - 1709)
T H E S TAT E O F PAY 2 0 19 –2 0 2 0 16PAY I NG AND BEING PAI D
Mobile payments
Use of mobile payments Use of contactless mobile payments But concern around security of mobile
has grown over time: contactless mobile payments could present a barrier
is growing steadily payments for small daily purchases has to further growth. Over half of
more than doubled from three percent respondents (54%) agree they ‘worry
In 2017, we looked in detail at the of respondents in the 2017 survey, to 10 that mobile payments aren’t secure’,
growth of mobile payments in-store percent in 2019. Is this because paying rising to around two thirds of those
and online. Our findings showed that using a phone is more convenient than aged between 45 and 75.1 Non-users
use of mobile payments was increasing rooting around in your wallet or purse for of mobile payments are also worried:
across all types of purchases, and two a card? Perhaps having to authenticate 62% of respondents not currently using
years on there’s an increase once again. a mobile payment with a fingerprint or mobile payments agree they have
passcode reassures more people to give concerns that mobile payments are not
Awareness of mobile payments it a go? Our focus group participants secure. Respondents who use mobile
technology has risen slightly in the tended to agree with these suggestions, payments are significantly less worried
past two years. Sixty-nine percent of but also noted ‘performance anxiety’ (45% either strongly or slightly agree),
respondents in 2017 were aware of when making contactless mobile which could suggest that those who
at least one mobile payment method payments: fear the technology won’t have ‘bitten the bullet’ — so to speak —
(including making a contactless payment work, or that their battery would run out. are reassured by their experience so far.
using a smartphone or paying using a Will their testimony encourage others to
mobile app or browser) — this has risen It’s a similar story when it comes to give it a go?
to 74 percent of respondents in 2019. making payments online. In the two years
to 2019, the proportion of respondents Or, perhaps it’s within banks’ power to
A tenth of respondents (10%) now making payments for larger purchases reassure their customers? Banks can
pay for small everyday items using (like airline tickets or electronics) using support customers through innovations
contactless smartphone technology, a mobile phone browser has increased around security, or through education
and eight percent pay this way in a threefold from 3 percent to 12 percent or improved communication of security
restaurant or bar. The proportion (this proportion grows to 18 percent solutions like tokenisation — a process
of respondents using contactless among respondents in Greater London). of substituting sensitive payment data
smartphone payment technology is with a non-sensitive equivalent that has
highest in Greater London in both Forty three percent of respondents agree no extrinsic or exploitable value. As the
these payment scenarios: 17% of they’d like to be able to see their available mobile payments proposition matures,
respondents in Greater London use balance each time before they pay via it’s likely this is the area in which the
contactless smartphone payments their mobile phone, which could drive battle will be won or lost.
for both small daily purchases under adoption of mobile payment solutions
£30 and for paying in restaurants like Barclays PingIt and others enabled by
or bars (compared to 10% and 8% Mastercard’s Pay by Account, which allow
respectively among all respondents). people to make payments directly from
their bank account instore or online.
T H E S TAT E O F PAY 2 0 19 –2 0 2 0 17PAY I NG AND BEING PAI D
Paying bills
The most used payment Paying for bills like water, power, rates, phone bills etc:1
method for regular bills is
Direct Debit
Seventy-four percent of respondents
pay for bills including utilities and mobile
phone contracts via bank transfer such
13% pay bills online using a
computer or tablet
as a Direct Debit or standing order
15%
— that’s significantly higher than all
another forms of bill payment we asked pay bills offline pay using
about, and an increase of 13 percentage credit/debit card Chip & PIN
points from 61 percent of respondents
in 2017.
5%
Direct Debits can be a reliable and
efficient way for people to manage and pay bills online using a mobile
plan their regular outgoings. Almost half phone’s browser via card payment
of respondents (49%) said they would
like their Direct Debits to leave their
accounts on the same day each month,
6%
and many participants in our focus
groups would prefer to choose that day pay bills offline using cash
to align with when their salary or other
income is received into their account.
“I like the idea of selecting the date
for my direct debits. It would offer
me flexibility and allow me to tailor
outgoings more accurately to payday”
Leeds
1. Q: How do you currently pay in each of the following situations, if at all? Please select all that apply. Paying bills like for water, power, rates, phone bills etc. Base
definition: UK adults aged 16 to 75, all are current account holders and use a mobile phone regularly. (Base size: 1862)
T H E S TAT E O F PAY 2 0 19 –2 0 2 0 18PAY I NG AND BEING PAI D
Request to pay
The UK’s existing account to account Vocalink has been developing a Request
payments systems are designed to to Pay solution, which provides a secure
work well for the majority of people messaging channel between billers and
with regular and predictable incomes. consumers. Being driven by Pay.UK with
However, in recent years there has been support across the payments industry,
a notable increase in individuals who will allow people to pay their pre-existing
receive irregular and unpredictable bills in ‘chunks’ within more flexible
salaries/incomes.1 For these individuals timeframes via their mobile phones. It
their financial outgoings – from rent will give them more control over their
or mortgage payments, council tax, outgoings than current methods afford
utilities or childcare – all need to be paid them, reducing the inflexibility that is
regularly regardless of whether they forcing many into a cash economy.
have the funds to do so.
This tension between irregular income
and regular outgoings, can result in
failed payments, which could lead many
people who can least afford it to incur
a ‘poverty premium’ in the form of a
higher cost for goods and services, and
credit. These factors may contribute to
household indebtedness as individuals
are potentially forced into short term,
high cost credit, such as payday lenders.
1. Source: University of Hertfordshire
T H ET S
H TAT
E S TAT
E OEF O F PAY
PAY 2 0–2
2 0 19 190–2
2 00 2 0 19 19PAY I NG AND BEING PAI D
Paying other people
More respondents When it comes to paying friends and There’s also a clear demand for
family outside the UK, the most used confirmation that the money has
are paying friends method among respondents is via bank been received. Eighty-six percent of
and family digitally transfer (either online or in person), with respondents who have sent money
65% of respondents doing this. This abroad agree they’d like to receive a
Since we began our survey we’ve figure is made up of respondents using an confirmation like this each time they
recorded an increasing number of online bank transfer specifically (57%) or made a transfer (of which 54% of these
respondents transferring money in-person, in branch (18%). Participants respondents strongly agreed). Several
to friends and family in the UK via in our focus groups said they chose to participants in our focus groups who
a smartphone. The proportion of visit a branch because the additional send money abroad told us the only way
respondents doing so using a mobile information they need to provide to make they can currently find out if their money
banking app has risen from about a an international payment, such as an has reached its destination is by asking
quarter (27%) in 2017, to just over a IBAN number, made them less confident the recipient directly. These participants
third (38%) in 2019. about their ability to set up the recipient queried why it couldn’t be faster, simpler
correctly themselves. and more transparent.
Could this be a reflection of new ways
to pay family and friends via mobile The next most popular method used by ‘Once you send that money, that’s it,
entering the market? In 2014, Vocalink respondents when sending money to you have no control of it’
built, and the industry launched, Paym friends or family in another country was London
— a mobile payment solution that allows a money transfer company (57%), which
people to send money from their mobile includes using PayPal — just over a third Almost a tenth of respondents in our
banking app to another person using (35%) use PayPal to perform this activity. survey (9%) still make international
just their phone number regardless of payments to friends and family using
who they bank with. When we asked But there are considerable frictions, cash or cheque, which they post via the
participants in our focus groups what mostly relating to cost. Sixty-eight Post Office or another courier. Most
they liked most about this solution, most percent of respondents agree the ‘fees participants in our focus groups who
agreed it was easier and less prone to for sending money to another country make international money transfers
error than inputting the recipient’s bank are far too high’. Long delays are another agreed this was a slow and unsafe way
account details. Most participants in pain point, with 51 percent of respondents to send money abroad.
our groups said they prefer to ask for agreeing ‘the time it takes for the money
payments this way, especially if they’re to clear in the recipient’s account is far
receiving money from someone they too long’. Many participants in our focus
don’t know well, so they don’t have to groups who regularly send money to
expose their account information. friends, family and businesses abroad
complained of high, unpredictable fees
and perceived a high risk of fraud.
T H E S TAT E O F PAY 2 0 19 –2 0 2 0 20PAY I NG AND BEING PAI D
Use a smartphone mobile banking app to send money
to friends and family in the UK1
23% 38% 27%
2015
2017
2019
51%
of those who send international payments
86%
of those who send international payments
agree the time it takes for the money to clear agree they would like to see confirmation of
in the recipient’s account is far too long when the payment is received
1. Q: When it comes to your personal banking, in which of the following ways, if any, do you perform each of the following activities? Transferring money to/from friends
or family within the UK. Base definition: UK adults aged 16 to 75, all are current account holders and use a mobile phone regularly. (Base size: 2019 - 2002; 2017 - 2019;
2015 - 2664)
T H E S TAT E O F PAY 2 0 19 –2 0 2 0 21PAY I NG AND BEING PAI D
The last bastion of cash?
“I like to be in control When we asked participants in our focus groups what they expect to see in the
future of payments in 10 to 15 years, many said — or feared — that cash might
of my money; with cease to exist. But there are still a few scenarios or touch-points in our respondents’
cash, you can see it” financial lives where cash continues to play a significant role.
London Nights out, for example, are still dominated by cash spend: many participants in
our focus groups told us they choose to leave cards at home to avoid losing them or
having them stolen, while others participants felt that allocating themselves a cash
budget reduces the risk of overspending while socialising.
When it comes to making irregular bill-type payments, such as for taxis,
tradespeople and small businesses, and charities, what we heard from respondents
in our survey shows us that in these types of payment scenarios, cash can still reign
supreme. The reasons for this, however, are more complex than they first appear.
C HARI T IES AND D O NAT IO NS
It’s more common to donate cash,
but alternative payment methods
are appreciated
About two thirds (66%) of respondents make one-off donations to charities in cash.
This suggests that cash is a common method for charitable giving however, there
may be some caveats to this. Many focus group participants who make donations to
charity told us they’re reluctant to donate to charities they encounter on the street,
whether in cash or using a card. Instead, they prefer to make regular donations to
“I pay on sites like Just Giving; I don’t charities they feel a personal affinity with, and their preference is to do so via Direct
like being stopped in the street” Debit or online.
Bristol
Many focus group participants speculated - based on their own behaviour - that
cash donations to rough sleepers is reducing over time, given that people tend to
carry less cash. Those participants that did donate to rough sleepers said they
prefer to give food or drink, or to ‘pay it forward’ in cafés or restaurants by adding a
charitable donation to their food bill.
T H E S TAT E O F PAY 2 0 19 –2 0 2 0 22TRADES PEO PL E AND S M A L L B US INESS ES
There are potential benefits for
paying by cash
More than two thirds of respondents (70%) make payments to small businesses,
including tradespeople like plumbers and electricians, using cash.
In our focus groups, many participants shared experiences where they were offered
a discounted rate for cash payments, and while this made some uncomfortable, the
potentially considerable savings make paying in cash worth considering. Other focus
group participants rationalised that small businesses suffer poor cashflow, among
“It can feel dodgy when someone other pressures, and are therefore willing to do whatever they can to help.
asks for cash, but I would rather
save money” While cash dominates for this payment scenario, digital payments methods are also
London used by many. Twenty-nine percent of respondents pay small businesses and services
such as plumbers and electricians using a credit or debit card with Chip & PIN, and 15
percent pay using contactless credit or debit card (up 14 percentage points from 1%
In 2017). This may correlate with a significant growth of acceptance terminals that
link to tradespeople’s smartphones to allow them to take card payments on the go.
TAXI S AND PUB L IC T RANS P O RT
Cash (mostly) beats the competition
when it comes to paying for taxis
Eighty-four percent of respondents pay for taxis using cash, suggesting that cash
is perhaps the most preferred (or at least highly available) payment method in this
scenario. However, there are some significant regional variations to note. The region
with the lowest proportion using cash for taxis is Greater London. Respondents in
Greater London use a mix of both cash and card with just over half (53%) using cash
to pay for taxis, and a similar proportion (56%) using a debit or credit card.
“If the fare comes to £8 I hand over a Alongside these results from our survey, many focus group participants told us that
tenner and say ‘keep the change’” in their experience, taxi drivers show a strong preference for payment in cash even if
Edinburgh they do accept card; these participants said they’re happy to oblige so the driver can
receive the funds immediately. Many participants also told us they prefer to use cash
as a means of tipping.
When paying for public transport, cash is used by 65 percent of respondents.
Similarly to paying for taxis, there was significant variation by geography in the
proportion of respondents using cash to pay for public transport. The region with
the highest proportion of respondents using cash in this scenario was Wales, with 90
percent of respondents using cash; this is in comparison to almost a quarter (23%)
of respondents in Greater London. Contactless credit or debit cards account for just
over a third (39%) of respondents making payments for public transport.
T H E S TAT E O F PAY 2 0 19 –2 0 2 0 23PAY I NG AND BEING PAI D
Being paid
By what means, and when, are employed on a full or part-time wages more frequently would help them
contract are paid on a monthly basis; manage their finances more effectively
do people get paid? while a third (32%) of the self-employed (compared to 26 percent of respondents
workers we spoke to in the survey are earning any type of salaried income).
We asked respondents in our survey paid weekly, and one in 10 of these This may be because the gig workers
earning an income by what means they respondents (10%) are paid daily. we spoke to in our survey struggle to
receive this money. Their responses make ends meet: 52 percent of these
suggest that when it comes to salary, More than one in 10 respondents ‘gig worker’ respondents agree ‘I usually
wages and incomes, it may well be the (12%) who participated in our survey run low on money in the days leading
type of employment or income source fall into the category of gig workers, up to my next payday’ (compared to 40
that decides how people get paid. including online merchants, those on percent of respondents earning any type
zero-hour, casual or seasonal contracts, of salaried income). Fifty-six percent
Ninety-four percent of respondents or contracting via a gig platform such of these ‘gig worker’ respondents also
who receive an income from a regular as Uber or Task Rabbit. A fifth of agree that ‘worrying about running out
or part-time source have their salary these ‘gig worker’ respondents (20%) of money between paydays is stressful’.
or wage paid to them by bank transfer say they get paid weekly, and eight
or Bacs (this is a higher proportion of percent say they get paid daily. But It’s little surprise, then, that 61 percent
respondents than in 2017 where 87% whether these ‘gig worker’ respondents of the gig workers we spoke to find it
of respondents earning an income determine this frequency themselves, appealing to have instant access to
received their salary/wage in this way). or whether it is determined for them their earned wages whenever they need
Cash is not a typical method for salary by the platforms or agencies they use them. This includes 20 percent of these
or wages — five percent of respondents to source their work is less clear. ‘gig worker’ respondents describing
who receive a regular or part time income this as an ‘extremely appealing’ idea.
are paid their salary/wage in cash. More flexibility in how often, and by This is a significantly higher proportion
what means it’s possible to receive than the number of self-employed
The frequency with which respondents wages is an idea that holds appeal to respondents (14%) and respondents in
get paid also seems to correlate with many of these ‘gig worker’ respondents full or part time work (7%) finding this
their type of employment. Just over we spoke to. Thirty-eight percent of an ‘extremely appealing’ idea.
four fifths of respondents (84%) who these workers agree that receiving
“I prefer to receive payment directly
into my bank account”
Edinburgh
T H E S TAT E O F PAY 2 0 19 –2 0 2 0 24PAY I NG AND BEING PAI D
Which of the following, if any, have you personally
done between pay days in the last 12 months?
3%
Borrowed from another source
5%
4%
Asked to delay a payment
9%
8%
Missed a payment or made it late
16%
10%
Gone without essential items
19%
15%
Borrowed money from friends and family
24%
18%
Used my credit card to delay payment
21%
20%
Gone into my overdraft
28%
24%
Gone without non-essential items
36%
38%
Put off making a purchase
49%
In full or part-time employment Gig workers
Figure 1: Which of the following, if any, have you personally done between pay days in the last 12 months? Base size: Respondents in full or part-time employment - 1075;
Gig workers (all respondents on a zero-hours contract; self-employed; agency, casual or short-term contact workers; sell goods/services online) - 160
T H E S TAT E O F PAY 2 0 19 –2 0 2 0 25PAY I NG AND BEIN G PAI D
Small business owners:
Labouring a little behind the times?
Business banking
A big challenge for many UK small businesses today is keeping Sixty-seven percent of microbusiness users of
on top of the fast pace of change in payment technology. banking services do not use business banking apps.
To find out more about what small businesses are doing to 1 in 3 of these microbusiness respondents (38%)
manage their banking and payments needs, we spoke to 300 cite security concerns as a barrier, agreeing that
users of banking or payment services in a UK microbusiness they ‘do not feel secure using a banking app’ for
with 0 to 9 employees. business banking’.
The majority (over two thirds) of microbusiness users of Some of the small business owners participating in
banking services use a desktop computer or laptop to conduct our focus groups use the Post Office to perform a
their regular banking activities.1 range of banking activities, such as paying in cash
and cheques.
COMPUTER
77%
MOBILE “If my local Post Office
26%
wasn’t there it would be a
check their business account balance
nightmare. I would end up
COMPUTER stocking cash and cheques
68% and that would impact on
my cashflow”
MOBILE
21%
transfer money between their business bank accounts Bristol
Business payments
Half of microbusiness users
of banking services (50%) use
cash for small daily purchases
55%
agree they like to
59%
pay for large
64%
pay their employees’
under £30: 2 have the option to expenses using salaries via direct debit
pay with cash a personal card or standing order
1. Q: Thinking about your business or the company you work for, in which of the following ways, if any, do you perform each of the following activities? Checking the
balance of bank account(s) and Transferring money between company bank accounts. Base definition: users of banking or payment services in a UK micro-business,
with 0 to 9 employees (Base size: 300)
2. Q: For the statements about payments below, please indicate to what extent you agree or disagree with each of them. I like to have the option to pay using cash
whenever I want to.
Q: Thinking about your business or the company you work for, in which of the following ways, if any, do you perform each of the following activities? Paying for larger
expenses like airline tickets or electronics and Paying employee salaries. Base definition: users of banking or payment services in a UK micro-business, with 0 to 9
employees (Base size: 300)
T H E S TAT E O F PAY 2 0 19 –2 0 2 0 26You can also read
