A detailed analysis of the cards, payments and consumer banking market in United Kingdom, with clear commentary supported by historic and forecast data.
The dynamic nature of contemporary payments is nowhere clearer than in this market. The migration from cash, new technical possibilities coming on stream from Open Banking and Faster Payments, and ongoing regulatory reshaping of markets presents opportunities for canny and innovative players.
Contactless, already a mass phenomenon, has flourished further in the Covid era, with cash usage falling by a fifth in half a decade. As credit cards embark on a two- or three-year recovery period after the initial Covid lockdowns, online debit card purchase volume has soared. In contrast, BNPL, from a very low base, has boomed as younger consumers show an appetite for new ways of doing things. A Request-to-Pay feature, far surpassing direct debit in terms of flexibility and customisation, was added to the Faster Payments Service in 2020.
Demographics and the economy
Key retail banks and issuers
Acquiring and processing
Regulatory and other cards market information
Appendices: Payments Data
Appendix I: Demographics and the economy
Appendix II: Payments environment
Appendix III: Cards market
Appendix IV: Mobile payments
Appendix V: Profit pool
Appendix VI: Card networks
Appendix VII: Key retail banks and issuers
Appendix VIII: Acquirers and processing
Appendix IX: Online acquiring
Demographics and the economy
Real GDP is forecast to increase during 2021 and 2022. However, this greatly depends on the response to the pandemic, especially with regard to the rollout of vaccines. In addition, as the UK's transition period after leaving the EU ended so recently, it is difficult to predict the precise impact of Brexit on economic performance.
The United Kingdom's retail banking and payments markets are highly developed and competitive. Emerging payment technologies and progressive regulation have accelerated the pace of development in recent years.
Payment Cards Market
Britain is Europe's biggest market for payment cards – and one of the world's most advanced and innovative. The market is also mature, with a high penetration rate of credit and debit cards by global standards.
Most mobile wallets currently available here run exclusively over card rails. There may be opportunities for players to offer differentiated services which leverage the FPS (Faster Payments Service) infrastructure and Open Banking. In particular, large merchants and tech players have both the scale and market influence to drive consumer adoption of new payment systems.
There was a substantial decline of 21% in industry-wide profitability during 2020. This was primarily due to the decline in British economic activity as pandemic-related restrictions confined Britons to their homes, which resulted in a substantial decrease in credit card spending and borrowing.
Mastercard and Visa account for the vast majority of credit cards in issue. At the end of 2020, the total number of credit cards issued by Mastercard stood at 40 million, equating to a market share of 61%; Visa had 22 million cards, representing 34%. Visa is the leader in Britain's debit card networks market, with a market share of 85% of cards in issue at the end of 2020.
Key Retail Banks and Issuers
Five banks dominate the British retail banking market: Lloyds Banking Group, NatWest Group (formerly RBS), HSBC, Barclays and Santander. These accounted for around 76% of debit cards in issue at the end of 2020.
Acquiring and Processing
Britain's acquiring market is concentrated, with some 60% of total acquired billed volume in the hands of two of the largest merchant acquirers globally: FIS (Fidelity National Information Service) and Barclaycard. Independent service operators have made significant inroads into the British acquiring processing market as they have globally. These service providers have more scope to invest in technology while offering competitive pricing thanks to their large scale.
The United Kingdom is a global leader in e-commerce adoption: total online acquired billed volume made using payment cards reached an estimated $342 billion in 2020, through an estimated total of 2.8 billion transactions. CNP billed volume represented an estimated 36% of total acquired billed volume during 2020.
Regulatory and Markets Information
Pay.UK is also responsible for delivering the 'New Payments Architecture' (NPA), which aims to unite the various interbank clearing systems under one authority, thus simplifying retail payments. As of early 2021, two aspects of the NPA have been implemented: Confirmation of Payee (CoP) and Request to Pay (RtP).
Alliance & Leicester
Allied Irish Banks
Bank of America
Bank of England
Bank of Ireland
Bank of Scotland
Bradford & Bingley
Cheque and Credit Clearing Company
European Central Bank
Faster Payments Service
Fidelity National Information Service
Financial Conduct Authority
International Monetary Fund
International Telecommunication Union
John Lewis Financial Services
Marks & Spencer
Marks and Spencer Financial Services
Mobile Payments Service Company
New Payments Architecture
Office for National Statistics
Pay by Bank app
Payment System Regulator
People's Bank of China
Prudential Regulation Authority
Transport for London
UK Payments Administration
Universal Trust Service Provider
Verisk financial reports include detailed market and competitor intelligence on payments cards, e-money, acquiring, retail banking, and consumer credit in Europe. Analysts use primary and secondary source data and conduct in-depth interviews with senior industry executives and European finance experts.
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