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UK Consumer Attitudes towards Mobile Payments market report

"Despite the huge interest in mobile payments across the financial services industry, Mintel's research suggests that actual usage is low. Companies have two main challenges to overcome to achieve growth: they have to convince consumers that paying with a smartphone is a secure transaction method; and they need to give people a compelling reason to switch from using cards. Consumers are most likely to use mobile payments if they are rewarded for doing so through schemes such as Android Pay Day."

Rich Shepherd, Senior Financial Services Analyst

This report looks at the following areas:

  • Security concerns are consumers' biggest turn-off
  • Incentives are the key
  • A cardless, not cashless society

This Report looks at consumer attitudes towards mobile payments. This includes an examination of the market context surrounding contactless and mobile payments and regulatory changes in the industry, as well as looking at the main mobile payment services and innovations. Mintel's exclusive consumer research investigates the type of payments people make, how aware they are of mobile payment services and what types of transactions are made through smartphones.

Finally the Report examines consumer attitudes such as why people would choose to use make mobile payments, their thoughts on the security of these payments, and consumer concerns about the usability of the technology.

For the purposes of this Report, Mintel has used the following definitions:

  • Peer-to-peer mobile payment services: A number of the best-known mobile payment services involve transferring money via an app, rather than making a point-of-sale transaction. This includes the most well-known and widely used payments service, PayPal. These schemes are often used to transfer funds between individuals, but can also be used to pay companies.
  • Point-of-sale mobile payment services: Point-of-sale mobile payment services are schemes which allow in-store purchases. Currently, most of these services rely on near-field communication (NFC) technology. These are the systems which are most closely associated with the term mobile payments as a competitor to cash and cards. This includes Apple Pay and Android Pay.

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Table of contents

  1. Overview

    • What you need to know
    • Executive Summary

        • The market
          • Cash and card payments both grow, as contactless finally takes off
            • Figure 1: Monthly contactless card spend and average contactless card transaction value, March 2014-March 2017
          • The payments market enters a new era of open innovation
            • The consumer
              • Cash is still the most commonly used payment method
                • Figure 2: Use of payment methods, aggregated, April 2017
              • PayPal leads the way for awareness and use
                • Figure 3: Awareness and use of selected mobile payment schemes, April 2017
              • Laptop and desktop computers dwarf smartphones for online purchases
                • Figure 4: Proportion who have made any online purchase, by age, April 2017
              • Two-thirds say they typically use credit or debit card online
                • Figure 5: Online payment preferences, April 2017
              • Apps are narrowly preferred to web browsers for payments
                • Figure 6: Mobile payment preferences, app versus browser, April 2017
              • Security concerns and personal preferences hold smartphones back
                • Figure 7: Reasons for not using a smartphone for payments, April 2017
              • Direct Debits are carefully managed to ensure they are convenient
                • Figure 8: Agreement with statements about Direct Debits, April 2017
              • Payment acceptance continues to shape how people spend
                • Figure 9: Attitudes towards payment methods, April 2017
              • What we think
              • Issues and Insights

                • Smartphone payments will struggle to overcome preference for other methods
                  • The facts
                    • The implications
                      • Request to Pay could find favour as an alternative to Direct Debits
                        • The facts
                          • The implications
                          • The Market – What You Need to Know

                            • Cash and card payments both grow, as contactless finally takes off
                              • The payments market enters a new era of open innovation
                              • Market Context

                                • Debit and credit cards show strong volume growth…
                                  • Figure 10: Total volume of point-of-sale and online retail card transactions, not seasonally adjusted, January 2014-March 2017
                                • … but value growth is more controlled
                                  • Figure 11: Total value of card spending, with online breakdown, not seasonally adjusted, January 2014 – March 2017
                                • Contactless card spending finally takes off in earnest…
                                  • Figure 12: Monthly contactless card spend and average contactless card transaction value, March 2014-March 2017
                                • … as contactless cards begin to become standard
                                  • Figure 13: Number of contactless cards issued and number of contactless transactions, March 2014 – March 2017
                                • Direct Debits are growing predictably
                                  • Figure 14: Bacs monthly volume and value of Direct Debits, January 2014-March 2017
                                • Cheque tech is unlikely to reverse the decline of cheques payments
                                  • Figure 15: Bacs monthly volume and value of Direct Debits, January 2014-March 2017
                                • Cash withdrawals have continued to rise
                                  • Figure 16: Annual value of cash withdrawals from LINK ATMs, 2014-16
                              • Recent Developments in Payments

                                • SEPA and PSD2 likely to stay put, despite Brexit
                                  • Mastercard’s acquisition of Vocalink gets approval
                                    • The ‘Open API’ era begins with Starling Bank release
                                      • Samsung Pay launches in the UK
                                        • Contactless ventures beyond cards and smartphones
                                          • In China, Alipay and WeChat show the power of a broad user base
                                          • The Consumer – What You Need to Know

                                            • Cash is still the most commonly used payment method
                                              • PayPal leads the way for awareness and use
                                                • Laptop and desktop computers dwarf smartphones for online purchases
                                                  • Apps are narrowly preferred to browsers for mobile payments
                                                    • Security concerns and personal preferences hold smartphones back
                                                      • Direct Debits are carefully managed to ensure they are convenient
                                                        • Payment acceptance continues to shape how people spend
                                                        • How Do People Pay?

                                                          • Almost everyone still uses cash…
                                                              • Figure 17: Use of payment methods, aggregated, April 2017
                                                            • … but cards are catching up
                                                              • Almost half of people are active contactless users
                                                                • Contactless smartphone payments have some way to go
                                                                  • Figure 18: Use of payment methods by time-scale, aggregated, April 2017
                                                                  • Figure 19: Use of payment methods, by time-scale April 2017
                                                                • The majority use a wide range of payment methods
                                                                  • Figure 20: Number of payment methods used in the last six months, April 2017
                                                              • Awareness and Use of Payment Schemes

                                                                • PayPal converts highest awareness into strongest use
                                                                  • Figure 21: PayPal UK ‘New Money’ tweet, 8 May, 2017
                                                                • Scope for growth among tech giants’ payment services
                                                                    • Figure 22: Awareness and use of selected mobile payment schemes, April 2017
                                                                  • PayPal strikes a chord with older age groups
                                                                    • Millennials are key market for retail payment schemes
                                                                      • Figure 23: Awareness of selected mobile payment schemes, by age, April 2017
                                                                    • Apple Pay and Android Pay also rely on Millennial uptake
                                                                      • Figure 24: Use of selected mobile payment schemes, April 2017
                                                                  • Online Purchasing Behaviour

                                                                    • Smartphone purchases still dwarfed by home-based devices…
                                                                      • … but transfers to friends and family show promise
                                                                        • Figure 25: Online purchasing behaviour, payment type by device, April 2017
                                                                      • Younger people are comfortable operating across many devices…
                                                                        • Figure 26: Proportion who have made any online purchase, by age, April 2017
                                                                      • … and more likely to use their mobile for bank transfers
                                                                        • Figure 27: Proportion who have made any online transfer, by age, April 2017
                                                                    • Online Payment Preferences

                                                                      • Debit card outweighs payment providers despite greater convenience
                                                                        • Figure 28: Online payment preferences, April 2017
                                                                      • Payment providers appeal across the age spectrum
                                                                        • Figure 29: Online payment preferences, by age, April 2017
                                                                    • Mobile Payment Preferences

                                                                      • Apps are narrowly preferred to web browsers for payments
                                                                          • Figure 30: Mobile payment preferences, app versus browser, April 2017
                                                                        • Older people are more likely to show indifference
                                                                          • Figure 31: Mobile payment preferences, app versus browser, by age, April 2017
                                                                      • Barriers to Smartphone Payments

                                                                        • People need convincing of the benefits of mobile payments
                                                                          • Security also remains a barrier for a third of non-users
                                                                              • Figure 32: Reasons for not using a smartphone for payments, April 2017
                                                                              • Figure 33: Number of reasons for not using a smartphone for payments, April 2017
                                                                            • Security concerns highest among 35-44s
                                                                              • Figure 34: Reasons for not using a smartphone for payments, by age, April 2017
                                                                            • Four out of five people with mobile security concerns still shop online
                                                                              • Figure 35: Reasons for not using a smartphone for payments, by online purchasing behaviour, April 2017
                                                                          • Attitudes towards Direct Debits

                                                                            • More than three quarters of people have at least one Direct Debit
                                                                              • Figure 36: Direct Debit Ownership, by age, April 2017
                                                                            • People with no Direct Debits more likely to have been caught out in the past
                                                                              • Online banking aids Direct Debit management
                                                                                  • Figure 37: Agreement with statements about Direct Debits, April 2017
                                                                                • 25-34s represent a key target market for Request to Pay
                                                                                  • Figure 38: Attitudes towards Direct Debits, by age, April 2017
                                                                              • Attitudes towards Payment Methods

                                                                                • Payment acceptance continues to shape how people spend
                                                                                  • Appetite for higher value contactless transactions
                                                                                      • Figure 39: Attitudes towards payment methods, April 2017
                                                                                    • 25-34s are pushing forward, but are irked by poor acceptance levels
                                                                                      • Figure 40: Attitudes towards payment methods, by age, April 2017
                                                                                  • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                      • Abbreviations
                                                                                        • Consumer research methodology

                                                                                        Companies Covered

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