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EXECUTIVE SUMMARY
- Opportunities for the consumer payment preferences market
- Build trust in digital payment security
- Target younger parents with carbon-offsetting digital wallets
- Teach children to manage money to ensure their financial independence as young adults
- The market
- Market outlook for consumer payment preferences
- Debit card payments continue to rise in volume
- Graph 1: payment volumes, by payment type, 2016-23
- Impact of inflation and the “Liberation Day” tariffs
- What consumers want and why
- Debit cards are the most frequently used payment method
- Graph 2: payment methods used weekly, 2025
- A signal for businesses to optimise payment systems for mobile wallets
- Graph 3: preference for mobile wallet usage when paying a business, by transaction type and value, 2021 and 2025
- Graph 4: weekly use of mobile wallets, 2021 and 2025
- Main current account primarily used for mobile wallet payments
- Target younger Millennials with social media marketing and BNPL education
- Graph 5: respondents who typically use BNPL to make payments via a mobile wallet, by generation, 2025
- Familiarity is the leading factor for payment choices
- Graph 6: important factors when choosing payment methods, 2025
- Going cashless makes it harder for kids to learn about money
- Innovation and marketing
- Klarna’s recent partnerships
- Virgin Money and HSBC help customers manage finances more easily
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MARKET DYNAMICS
- Market background
- Debit card payments continue to rise in volume
- Graph 7: payment volumes, by payment type, 2016-23
- Card transaction value in 2024 is modestly up on 2023
- Graph 8: monthly value of card transactions in the UK, 2022-24
- Card transaction volume continues to rise in 2024
- Graph 9: monthly volume of card transactions in the UK, 2022-24
- Contactless payments are steadily increasing
- Graph 10: contactless payments, 2015-23
- Card payments will continue to gain ground over cash
- Market drivers
- Rise in inflation is slower than wage growth
- Graph 11: CPI and CPIH, 2021-25
- The Bank of England cut the base rate again in February, but borrowing pressures remain
- Impact of the “liberation day” tariffs
- Consumer confidence is recovering, but remains fragile under the weight of trade tariff pressures
- Graph 12: the financial confidence index, 2016-25
- Bank branch networks continue to decline
- Graph 13: bank and building society numbers, 2017-24
- Free-to-use ATMs also see steady decline
- Graph 14: cash machine numbers, 2014-24
- Regulatory and legislative changes
- National Payments Vision
- Next steps for open banking
- FCA releases final rules for access to cash regime
- Digital Markets, Competition and Consumers Act (DMCCA) 2024
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WHAT CONSUMERS WANT AND WHY
- Frequency of using payment methods
- Debit cards are used most widely in an average week, but are closely followed by cash
- Debit cards are the most frequently used payment method
- Graph 15: payment methods usage frequency, 2025
- Cash still matters
- Mobile wallet sees the largest increase in weekly usage
- Graph 16: weekly use of mobile and online wallets, 2021 and 2025
- Alternative payment solutions are more popular among under-35s
- Graph 17: select payment methods used weekly-monthly, by age, 2025
- Nine in 10 use at least three payment methods weekly-monthly, with direct debits leading the way
- Graph 18: repertoire of payment methods used weekly-monthly, by age, 2025
- Payments to a business
- Cards lead for in-person transactions, even for smaller amounts
- Graph 19: preferred payment method when paying a business, by transaction type and value, 2025
- Mobile wallets experience the fastest growth in preference when paying businesses
- Graph 20: using a mobile wallet when paying a business, by transaction type and value, 2021 and 2025
- Preference for using credit/charge cards
- Graph 21: preference for credit/charge card usage when paying a business, by transaction type and value, 2021 & 2025
- Payments to individuals, friends and family
- Bank transfers continue to lead transactions to individuals
- Graph 22: preferred payment method when paying a person, 2025
- Cash remains popular for payments under £50, especially among over-55s
- Cards and accounts used for mobile wallet payments
- Main current account primarily used for mobile wallet payments
- Graph 23: cards/accounts people typically use to make a payment via a mobile wallet, 2025
- Financially healthy adults are more likely to use credit cards
- Graph 24: use of credit cards to make payments via a mobile wallet, by financial situation, 2025
- Younger Millennials use BNPL more
- Graph 25: use of BNPL to make payments via a mobile wallet, by generation, 2025
- Target younger Millennials with social media marketing and BNPL education
- Important factors when choosing payment methods
- Familiarity and speed are the most important factors when deciding which payment option to use
- Familiarity with a payment method is important to more than half of adults
- Graph 26: important factors when choosing payment methods, 2025
- More than two thirds of over-55s emphasise familiarity
- Graph 27: important factors when choosing payment methods, by age, 2025
- Nearly half prioritise speed
- Attitudes towards payment methods
- Majority uncertain about a cashless future
- Graph 28: attitudes towards payment methods, 2025
- Going cashless stymies children’s financial education
- Build trust in digital payment security
- Affluent, younger parents show greater interest in digital wallets that offset carbon footprints
- Appeal to eco-conscious, financially savvy parents by aligning with their values
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INNOVATION AND MARKETING TRENDS
- Competitive strategies
- Open banking partnership with retailers
- Empower customers with greater flexibility
- Enhanced protection for bank transfers
- Virgin Money partners with Mastercard open banking for account integration
- Launch activity and innovation
- Klarna partners with Eurostar and John Lewis & Partners
- Klarna enhances its assistant with more OpenAI-powered AI features
- HSBC UK launches HSBC Flexipay
- Curve teams up with Infact to improve credit access
- Revolut has been authorised with restrictions as a UK bank
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APPENDIX
- Report scope and definitions
- Market definition
- Abbreviations and terms
- Consumer research methodology
- CHAID analysis – methodology data
Debit cards dominate the UK payments landscape, driven by the continued rise of contactless payments. Despite this, cash remains relevant, with 52% of consumers still using it weekly. By 2033, UK Finance predicts cash will drop to 3.4 bn payments, while card payments will continue to rise.
A key challenge for the market lies in addressing security concerns surrounding digital payments. 59% of consumers are more worried about security when making payments online than in-store. Additionally, mobile wallets, despite their growing popularity, face scepticism from a significant portion of users who question their safety. These concerns, along with regulatory demands, further intensify the pressure on providers to earn consumer trust.
An opportunity exists in the rising adoption of mobile wallets and sustainable payment solutions. Moreover, younger, financially healthy audiences are drawn to digital wallets with carbon offset features, offering brands a unique chance to innovate at the intersection of fintech and environmental responsibility. Strategic partnerships with eco-friendly initiatives and loyalty rewards tied to sustainability could foster long-term engagement and loyalty in this evolving market.
This report looks at the following areas:
- Card transaction volumes/value, contactless payments and access to cash
- Regulatory and legislative changes impacting consumer payment preferences
- Payment types used most frequently, with debit cards and cash in the lead
- Preference for payment types when paying a business vs an individual or friends/family
- Use of mobile wallets and cards/accounts typically used for mobile wallet payments
- Important factors when choosing payment methods, including familiarity, speed and security
- Attitudes towards payment methods, such as payment security, impact on children’s financial education and willingness to forego cash in the future
While contactless card volumes more than doubled from 2019-23, only 39% of UK adults would feel comfortable living without cash in the future.
Saltanat Kuermannal, Financial Services Analyst
Market Definitions
This Report explores consumers’ preferred methods of paying for goods and services, and how this is changing. It examines why consumers opt for specific types of payment, and how they feel about the increasing range of ways to pay.
This Report covers consumers’ use of and attitudes towards the following:
- Cash
- Debit card
- Credit/charge card
- Buy Now, Pay Later (BNPL, eg Klarna, Clearpay)
- Digital wallets (eg Apple Pay, Google Pay)
- Bank transfers
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