Noncash and card-not-present payments have soared in popularity in the UK

• Noncash and card-not-present payments have soared in popularity in the UK in the wake of the pandemic.
• And these changes in payment behaviors offer opportunities that would benefit card networks, issuers, and payments solution providers

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Cash’s share of in-store transactions in the UK plummeted from 45% in January to 23% in July, per a report from Square that analyzed data from hundreds of small- and medium-sized businesses (SMBs) across the UK.

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Meanwhile, card-not-present (CNP) transactions’ share of sales spiked to 33% in April, up from 2% in January. SMBs’ payment shares are shifting because sellers and their customers are looking to limit their risk of exposure to the coronavirus, and both cash and card-present payments can require people to touch shared surfaces.

Noncash and CNP payments will likely retain greater popularity throughout the pandemic and after it subsides.

• Cash payments have remained unpopular in the UK even as conditions improved, and many SMBs have become cashless in response to the pandemic. Cash’s share of in-store payments was between 22% and 24% from April through July even though the UK’s number of new coronavirus cases plunged over that time, so consumers may not want to use cash until the pandemic is over entirely. And considering 31% of SMBs recorded at least 95% of their transactions via cards in July, up from 8% in January, many firms may have enacted cashless policies during the pandemic. If these firms continue to only accept cashless transactions after the crisis, it’ll limit cash payments’ ability to bounce back, especially since cashless payments were popular in the UK prior to the pandemic, pushing more volume to card networks in the years to come.
• CNP transactions’ sales share peaked in April during the UK’s lockdown, but they’re still enjoying increased popularity months later. Their share of sales fell from 33% in April to 13% in July, likely because stores have reopened, but they still command a much higher share than the 2% they had in January. Consumers may still be limiting their visits to stores due to concerns about the virus, but it’s possible that they’re also enjoying the convenience of ecommerce and shifting their spend online. That trend could continue beyond the pandemic, meaning businesses would need to rely on ecommerce more heavily after the crisis than they did before.

These changes in payment behaviors offer opportunities that would benefit card networks, issuers, and payments solution providers, especially if the trends outlast the pandemic. For card networks and issuers, the shifts toward cashless and ecommerce payments mean they should capture more volume, which is much needed since many firms have struggled during the pandemic.

And if SMBs increasingly rely on cashless and online payments, that means they need new tools to accept noncash payment options and help them operate online, offering new revenue opportunities for point-of-sale, ecommerce platform, and fraud prevention solution providers.

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