Rise of Mobile Contactless Payments in the UK
Hey Payments Fanatic!
The UK has seen a substantial shift towards mobile contactless payments, with around 34% of adults using these methods at least once a month in 2023, according to UK Finance. Digital wallet services like Apple Pay and Google Pay have surged in popularity due to their enhanced security and higher spending limits compared to traditional contactless cards.
The number of adults registered for mobile contactless payments rose to 42% in 2023, up from 30% in 2022. Younger individuals are currently the most frequent users, but older age groups are expected to catch up over the next decade.
In 2023, 18.3 billion contactless payments were made in the UK, a 7% increase from 2022, with these transactions making up nearly 38% of all payments. Meanwhile, cash payments continued to decline, accounting for just 12% of all payments, down from 14% in 2022. Despite this decline, some people still rely on cash, particularly during economic uncertainty, with 2.6% of the population primarily using cash in 2023.
Remote banking also grew, with 87% of adults using online, mobile, or telephone banking services in 2023. Mobile banking saw significant growth, indicating a trend towards conducting all banking activities via mobile devices.
As digital wallet services continue to gain traction, their usage is expected to increase, further diminishing reliance on cash. However, recent IT outages have highlighted the need for a reliable digital payment system and the continued importance of cash as a backup.
Cheers,
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INSIGHTS
📈 In less than four years, PIX has grown to represent 43% of all payments in Brazil 🤯
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GOLDEN NUGGET
Payment Orchestration is reshaping the Multi-Provider model across geographies, channels and use cases 👇
A Payment Orchestration Layer is a third party (most of the time) - Yuno, Spreedly, CellPoint Digital, Gr4vy, Inc - that integrates and handles the relationship with the different payment service providers PSPs, acquirers, gateways, banks on a single unified software layer.
In other terms, they sit in between the merchant and the entire payment ecosystem. Their role is to bring simplicity, flexibility and an increase in conversion to merchants.
According to S&P Global, 67% of merchants do not want to have a single point of failure for payment processing. Merchants have been integrating multiple payment providers 1 by 1 using valuable time and resources in the process. An Orchestration Layer gives access to multiple payment providers through 1 integration.
The Benefits:
🔸 Avoid payment service provider lock-in
🔸 Reach new markets
🔸 Reduce processing fees
🔸 Increase conversions
🔸 Redundancy
🔸 Reduce fraud/chargebacks
🔸 Improve CX with fewer declines
A Payment Orchestration Layer can reduce the complexity of a Multi-PSP strategy by unifying and managing payment transactions across providers like Nuvei, Adyen, and Worldpay.
It automatically streamlines the routing of transactions based on rules and logic, 3DS and cascades until accepted. It can also determine which PSP offers the lowest processing fee for cards or local payment options in a particular country.
This solution is mostly seen in eCommerce today, especially for global merchants in digital verticals but is also relevant and expanding in the POS channel:
🔸 Omnichannel: Global merchants using Omnichannel must support many payment methods, and means of interacting with consumers across channels. Orchestrators help to recognize customers across channels and geographies
🔸 Marketplaces: Global marketplaces have some of the most complex set of payment requirements, supporting many buyers, sellers, in many geographies. Orchestrators help marketplaces to support a single infrastructure for managing buyers and sellers across providers.
🔸 SaaS providers expanding into FinTech: SaaS providers are increasingly bundling payments to enrich their proposition and to expand their revenue base. Orchestrators can help to centralize technical integration into a broad array of PSPs & payment methods.
How Tokenization enables a Multi-Processor Model - VGS x RoadSync 👇
RoadSync maintained a seamless payment processing experience with their PSP.
Unfortunately, s**t happens & SVB collapsed impacting its payment processing abilities.
The inclusion of an agile & flexible tokenization provider (VGS) & cloud infrastructure (Amazon Web Services (AWS) enabled RoadSync to switch payment providers over a single weekend. Ultimately, tokenization is a core element of a flexible payment infrastructure. Think carefully about it, you never know what can happen.
3rd-party providers — VGS, Basis Theory, Spreedly, Evervault — are able to generate agnostic tokens interoperable across channels & providers.
It's time to maximize your time, resources, cost, and overall payment strategy 🚀
Sources: S&P Global, Flagship Advisory Partners, The Paypers x2 with 2 great articles 👋
And I highly recommend following my partner at Connecting the dots in payments... Arthur Bedel 💳 ♻️ for more great updates like this one👌
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