The diverse economy of the United Kingdom attracts all types of businesses, especially in the ecommerce and online shopping space. The UK, which includes England, Scotland, Wales, and Northern Ireland, has the third-largest ecommerce market in the world behind the U.S. and China.
If you're interested in expanding your brand to the UK, you’ll want to familiarize yourself with these 5 commonly used payment methods.
5 Top Payment Methods in the UK
These are the most common ways for the nation's residents to make payments according to a 2022 report by UK Finance.
1. Debit and Credit Cards
UK shoppers use debit cards more often than any other payment method. Card payments (both credit and debit) made up 57% of the nation's transactions. Customers used debit cards in about 48% of all purchases.
Most UK residents have two or three debit cards, and 97% have at least one debit card they use for daily spending. Mastercard and Visa are by far the most popular options, accounting for 90% of the country's online transactions.
UK consumers make about 3.4 billion credit card purchases every year, placing this payment method as the nation's third most common. Transactions with this method increased by 21% from 2020 to 2021. Credit cards are the mainstay in industries like entertainment, travel, tourism, and hospitality.
Although cash ranks as the second most popular payment option in the UK, it's been on a steady decline for several years now as electronic payment methods skyrocket in popularity. The percentage of cash payments declined from 62% in 2006 to just 15% in 2021. However, more than a million people in the nation almost exclusively use cash for their daily transactions.
3. Contactless Payments
Contact-free payment methods have more than quadrupled in popularity in the UK in recent years. Consumers used contactless payments in 32% of transactions in 2021, compared to just 7% in 2016. An estimated 91% of debit cards and 89% of credit cards issued in the nation have contactless capabilities.
This dramatic increase occurred as buyers became more familiar and therefore comfortable with the contactless payment process. At the same time, more UK businesses introduced contactless options at point-of-sale, particularly during the COVID-19 pandemic. The UK government also increased the limit for contactless payments to £45 in April 2020.
4. Digital Wallets
About a third of UK adults made at least one digital wallet payment in 2021. Google Pay, Samsung Pay, and Apple Pay are the most popular digital wallets in the UK.
Digital wallet consumers typically use this payment method at least once a month (70%). Although this method is more popular among young adults than for older UK residents, seniors made 12% of total digital wallet payments in 2022.
5. Direct Debit
About 90% of UK customers pay at least some of their bills with direct bank account transfers. This method represented 4.6 billion transactions in 2021 alone.
Although bill payments are the most common use of direct debit in the UK, it's also a popular method accepted by service businesses. Gym memberships and other recurring subscriptions typically use direct debit for client payments.
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The Bottom Line
The UK offers limitless opportunities for new businesses, especially those in the ecommerce space. If you're ready to expand operations here or in another international market, familiarity with payment method trends can ensure that you cater to and connect with the local audience.
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