Predicting the future of cash and card payment volumes is arguably a fool’s errand – but Payments UK, Britain’s new trade organisation for the industry, is in a good place to have a go at guessing what’s to come. So what does the forecast tell us about how consumers in the UK will be making payments ten years from now?
We’ll be making more card payments
Card payment volumes are predicted to increase by 66 per cent over the next decade. These will be the chief reason why a record 44 billion payments are predicted to be made in 2024, which is up 3.4 billion on today’s figures and equates to 120 million payments being made per day.
Debit and credit cards accounted for 51 per cent of the volume of non-cash payments in 2014. But Payments UK says this figure will hit 60 per cent by 2024.
Debit card purchases are expected to grow from 9.2 billion in 2014 to 16.0 billion in 2024 and this channel will become the single biggest consumer payment method – 282 transactions per consumer per year, with cash in second at 225. Undoubtedly, the rise of easy, low-value contactless card payments is a big factor.
Faster Payments will be even more important
Real-time payments have been a big change in the last few years and the number made through the UK’s Faster Payments system is set to soar.
“The overall number of one-off payments processed as Faster Payments was 771 million in 2014 and is projected to reach 1.94 billion by 2024,” says Payments UK. “Direct Debits are forecast to see steady growth over the next decade and reach 4.2 billion payments in 2024.”
CHAPS volumes will rise three per cent each year over the next ten years, to reach just over 50 million payments in 2024.
Cash still key
‘Cash is dead’ etc etc – not if the Payments UK data is accurate. True, cash payment volume will fall 30 per cent over the next decade but it will still be the second most-used payment instrument after debit cards.
According to the forecast, cash will represent around one-third of the total volume of consumer payments, down from just over half today. The total value of cash spent by consumers will also fall but it’s going to still be a big part of our daily spending.
ATMs more important
Despite falling cash use as a payment method, it’s still only just going to be in second place to debit cards by 2024. That means ATMs are set to be just as important as they are today, perhaps more so given the increased functionality being built into the machines.
“Cash machines will remain the main method by which consumers acquire cash over the next ten years,” says Payments UK, noting that some 2.5 billion cash machine withdrawals will be made in 2024.
Interestingly, the value withdrawn is predicted to keep rising from today (£189 billion) through to 2019 (£196 billion), before falling back slightly over the years to 2024 (£192 billion).
Cheques down but not out, yet
Cheques, by comparison, will be struggling. As a percentage of all non-cash payments, cheques will slide from 2.8 per cent today to 0.8 per cent in 2024. As a volume of all consumer payments, cheques will fall from 1.1 per cent in 2014 to 0.4 per cent.
