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Nearly a third of UK consumers are now using digital and mobile wallets to pay for goods online

Mastercard
(Image credit: Mastercard)

New data from the Worldpay from FIS 2020 Global Payments Report shows that the UK is being fuelled by online sales through mobile devices, which are increasing thirteen percent per year, while desktop-based purchases are advancing at six percent.

According to FIS, this is largely being driven by the country’s growing ‘tap-and-go’ culture. In January this year, 32 per cent of credit card transactions and 45 per cent of debit card transactions in the UK were made using contactless cards.

“As technology evolves, so does the rapidly advancing payments landscape,” says Pete Wickes, SVP Corporate, Worldpay Merchant Solutions, FIS. “Where cash and cards once reigned supreme, we now have been introduced to digital wallets and even ‘Super Apps’, which marry up technology with advancing consumer needs.”

Changing landscape

However, according to the FIS findings, it is not just payment technology that is changing, it is the way British consumers are paying for goods and services which has drifted away from more conventional and traditional practices.

"Buy Now, Pay Later (BNPL) companies such as Klarna, Clearpay, Laybuy and PayL8r have taken the nation by storm and have no signs of slowing down as British consumers crave an alternative to traditional forms of credit,” furthers Wickes.

“Our data shows that to be competitive in these increasingly challenging times, retailers should be exploring new and emerging payment products such as BNPL, mobile and digital wallets.”

The report also shows that while debit and digital wallets make up most UK consumer purchases, flexible credit BNPL options, such as Klarna or Clearpay, are the fastest-growing online payment methods in the UK.

“Buy Now, Pay Later schemes are growing at 39 percent annually in the UK, and set to double their market share by 2023. They are growing twice as quickly as bank transfers and more than three times the rate of annual growth of digital wallets,” adds Wickes.

“While UK consumers still cherish their tap-and-go culture, they are certainly finding an appeal in online BNPL brands. As consumers here continue to adopt these new payment trends and broaden their payment methods, businesses must assess their offering to cater to evolving consumer expectations.”

Instant appeal

Wickes also underlines that in the 21st Century, customers crave instant gratification. “Consumers expect brands and businesses to keep up with their fast-paced lifestyles,” he says. “This changes the way we order, receive, and pay for goods, services, and content. In the Now Economy, providing service with a sense of immediacy is no longer a preference - it’s essential.”

The FIS data highlights how BNPL services are the new-age version of lay-by, except the third-party companies typically assume the financial risk. “It allows shoppers to take the product home with them instantly and you automatically receive a cleared payment within 24 hours. You could say it’s a win-win,” notes Wickes.

In addition, the report shows that with their unrivalled convenience, BNPL products have emerged as an attractive option for consumers seeking an alternative to traditional credit cards and who are craving payment experiences which fit their lifestyle and financial means.

“Consumers now want frictionless payments that can be completed with ease and on the go,” adds the SVP. “Digital and mobile wallets such as Apple Pay, Google Pay, and PayPal cater for this consumer need and as a result we have seen their popularity rise, with nearly a third (29 percent) of UK consumers using one of these methods to pay for goods online in 2019.”

Digital expansion

Overall, the UK’s e-commerce market - currently the third largest in the world - is forecasted to expand by 37 percent and is set to be worth US$319.8 billion by 2023. Also, by 2023, digital wallets are expected to become the most popular online payment method in the UK, accounting for 33 percent of the market.

And as social distancing becomes more prevalent in-store, consumers are also increasingly looking for more cashless and contact-free ways to pay at the cash register. Digital wallets are the fastest growing payment method in-store, growing 20 percent annually, according to the Worldpay report.

“As advances in technology continue to influence consumer preferences across the region, UK retailers and merchants need to ensure they are offering the right mix of payment methods to meet expectations,” adds Wickes in closing.