Looking to the future

Recent research shows that £288m was spent through mobile contactless payments in the UK in 2016, as 38 million transactions were carried

Looking to the future

This was a 247 per cent increase on the year before, with the most notable lift being from payments made via Android Pay. ‘Meal deal’ hotspots for workers buying lunch – such as supermarkets and grocery stores – accounted for 54 per cent of all mobile contactless payments processed. Pubs, bars and restaurants made up a further 20 per cent.

The popularity of mobile and contactless payments has demonstrated, more than anything, the acceptance of change when it comes to payments in the UK. This has led to an increasing amount of alternative payment companies chancing their arm too.

Despite the high penetration of debit and credit cards here in the UK, prepaid cards and alternative payment methods (APMs) are beginning to gain the nation’s attention, such as Pay by Bank app[7], a bank transfer payment method which is supported by most UK banks, have attracted unprecedented attention. Through Pay by Bank app, consumers can track spending in real-time via the mobile app and view spending by category, thus linking perfectly with the debit card credit account ideal. Pay by Bank app may be the first alternative payment to take off in the UK, but it will be far from the last. Indeed, as alternative payment options become cheaper and faster from a merchant standpoint, we predict that we’ll see a decrease traditional card payments over the coming years. For example, in mainland Europe, APMs are more popular than card payments and in some instances, such as iDEAL in the Netherlands, have the majority market share in the payment split. It is likely this trend will have a knock-on effect across the rest of the world, particularly here in the UK and can expect to see APMs dominate 55 per cent of worldwide online transactions.

Open Banking is a standard brought into the UK to encourage financial institutions to share data openly with third parties using Application Programme Interfaces (APIs) to improve the way consumers transact, save, borrow, lend and invest their hard-earnt money. Such insight can then be harnessed to build applications and resources for consumers to benefit from improved efficiency and innovation in the sector. Such readily available data will further encourage new players to develop at a faster pace within an already competitive market, pushing the UK ever closer towards becoming a cashless society.