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Consumer Payment Preferences - UK - November 2014

“Developers should reframe their task from making it easier to make a payment, and focus on making it easier to find and make purchases. Payments are a means to an end for consumers, payment platforms should remember this.”
– Rich Shepherd, Financial Services Research Analyst

This report looks at the following areas:

  • Make methods about more than just paying
  • Mobile payments need to develop independent security identities
  • A cashless society is widely expected, but not welcomed by most

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Table of contents

  1. Introduction

      • Abbreviations
      • Executive Summary

          • Use of payment methods
            • Cash is the most frequently used method…
              • Figure 1: Use of payment methods, September 2014
            • … but it is only the first choice when it comes to smaller purchases
              • Figure 2: Use of payment methods, by type of transaction, September 2014
            • Contactless cards
              • Nearly a fifth have paid with a contactless card
                • Figure 3: Ownership and use of contactless cards, September 2014
              • Satisfaction with Chip & PIN is holding back contactless cards
                • Figure 4: Reasons for not using a contactless card, despite owning one, September 2014
              • Security of payment methods
                • Cash is seen as the most secure option
                  • Figure 5: Confidence in security of payment methods, September 2014
                • Factors affecting choice of payment method
                  • Convenience and speed are key for small transactions…
                    • Figure 6: Factors affecting choice of payment method for a small purchase, September 2014
                  • … while security is the main concern for larger purchases
                    • Figure 7: Factors affecting choice of payment method for a large purchase, September 2014
                  • Payments and retailers
                    • Choice of payment method is of relatively little importance to consumers
                      • Figure 8: Attitudes towards payment methods and retailers, September 2014
                    • What we think
                    • Issues and Insights

                        • Make methods about more than just paying
                          • The facts
                            • The implications
                              • Mobile payments need to develop independent security identities
                                • The facts
                                  • The implications
                                    • A cashless society is widely expected, but not welcomed by most
                                      • The facts
                                        • The implications
                                        • Trend Application

                                          • Will we trust Apple and Google with our financial data?
                                            • A well-engaged youth can help boost mobile payments
                                              • User-friendly spending charts can help with budgeting
                                              • Recent Developments in Payments

                                                • Key points
                                                  • Expansion in contactless cards
                                                    • Adoption of contactless payments by TfL pushes contactless into the mainstream
                                                      • Issue rate of contactless cards is growing
                                                        • MasterCard and Zwipe have developed a biometric card
                                                          • Apple Pay set to revolutionise NFC industry
                                                            • Apple Pay rolls out in the US
                                                              • Cash on Tap
                                                                • Wearables
                                                                  • Barclays prepares to launch bPay band…
                                                                    • … while CaixaBank has brought payment wristbands to Spain
                                                                      • Apple’s smartwatch to include Apple Pay
                                                                        • Google Glass to allow users to ‘Nod to Pay’
                                                                          • Mobile payment and wallet services
                                                                            • PayPal to split from eBay after improvements to mobile services
                                                                              • Zapp widens partnerships in preparation for launch
                                                                                • Visa Europe to expand its V.me mobile wallet
                                                                                  • PayPal and eBay embrace Bitcoin
                                                                                    • Peer-to-peer mobile payments
                                                                                      • Paym enjoys strong debut…
                                                                                        • Social transactions
                                                                                          • Send cash in a tweet
                                                                                            • Online purchases set to be streamlined by Twitter Buy
                                                                                              • Venmo makes personal finance social
                                                                                                • Goodbye to paper money
                                                                                                • Use of Payment Methods

                                                                                                  • Key points
                                                                                                    • Cash is still the most commonly-used payment method
                                                                                                      • Figure 9: Use of different payment methods, September 2014
                                                                                                    • Small dip in regular Chip & PIN use
                                                                                                      • Most people have experience of many payment methods
                                                                                                        • Figure 10: Repertoire of payment methods used, September 2014
                                                                                                      • Young adults are most likely to use the most methods…
                                                                                                        • Figure 11: Repertoire of payment methods used, by age, September 2014
                                                                                                      • Resistance to innovation can be overcome…
                                                                                                        • … but older consumers have so far shunned mobile payments
                                                                                                          • Figure 12: Any use of mobile transfers, by age, September 2014
                                                                                                      • Preferred Payment Method by Type of Transaction

                                                                                                        • Key points
                                                                                                          • Cash is only first choice for the cheapest purchases
                                                                                                            • Figure 13: Preferred payment methods, by type of transaction, September 2014
                                                                                                          • Chip & PIN is first-choice for everything else…
                                                                                                            • … and debit cards are generally favoured
                                                                                                              • Purchasing habits are hitting cash use
                                                                                                              • Contactless Card Ownership and Use

                                                                                                                • Key points
                                                                                                                  • Two fifths of consumers have a contactless card
                                                                                                                    • Figure 14: Ownership and use of contactless cards, September 2014
                                                                                                                  • Ownership of contactless cards has doubled in two years…
                                                                                                                    • Figure 15: Ownership of contactless cards, 2012-14
                                                                                                                  • … and owners are increasingly likely to use their cards
                                                                                                                    • Figure 16: Use of contactless cards by those who own one, 2012-14
                                                                                                                  • Young adults are most likely to use contactless feature…
                                                                                                                    • Figure 17: Use of contactless cards, by age, September 2014
                                                                                                                  • ... while Londoners continue to lead the way
                                                                                                                    • A third still do not want a contactless card
                                                                                                                    • Barriers to Contactless Card Use

                                                                                                                      • Key points
                                                                                                                        • Satisfaction with Chip & PIN hinders contactless payments
                                                                                                                          • Figure 18: Reasons for not using contactless cards, September 2014
                                                                                                                        • Security fears also put people off
                                                                                                                          • Consumers are aware of improving infrastructure
                                                                                                                            • Figure 19: Agreement with the statement that “not enough shops accept contactless cards”, 2012-14
                                                                                                                          • Consumers are clear about the barriers that must be overcome
                                                                                                                          • Attitudes towards Security of Payment Methods

                                                                                                                            • Key points
                                                                                                                              • Physical payments seem the most secure…
                                                                                                                                • Figure 20: Confidence in security of payment methods, September 2014
                                                                                                                              • … despite them having their own dangers
                                                                                                                                • People are happier to disclose card, not account, information
                                                                                                                                  • Mobile payment platforms need to improve their security message
                                                                                                                                  • Factors Affecting Choice of Payment Method

                                                                                                                                    • Key points
                                                                                                                                      • Small purchases are dictated by convenience…
                                                                                                                                        • Figure 21: Factors affecting choice of payment method for a small purchase, September 2014
                                                                                                                                      • … while security and getting the best deal influence large payments
                                                                                                                                        • Figure 22: Factors affecting choice of payment method for a large purchase, September 2014
                                                                                                                                      • Making my money work for me
                                                                                                                                        • Figure 23: Agreement with statements on credit card reward schemes, May 2014
                                                                                                                                      • A third want help with maintaining budgets…
                                                                                                                                        • … which apps can provide
                                                                                                                                          • Who’s watching?
                                                                                                                                          • Attitudes towards Payment Methods and Retailers

                                                                                                                                            • Key points
                                                                                                                                              • Payment options will always be a marginal factor…
                                                                                                                                                • Figure 24: Attitudes towards payment methods and retailers, September 2014
                                                                                                                                              • … but can influence some consumers’ decisions
                                                                                                                                                • Contactless is still not a major draw
                                                                                                                                                  • Figure 25: Agreement with the statement “I prefer shopping at retailers that accept contactless cards’, by ownership of contactless cards, September 2014
                                                                                                                                                • People can see the cashless society on the horizon…
                                                                                                                                                  • … but most aren’t happy about it

                                                                                                                                                  Companies Covered

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                                                                                                                                                  Consumer Payment Preferences - UK - November 2014

                                                                                                                                                  US $2,842.31 (Excl.Tax)