In 2023, the UK’s e-commerce landscape experiences a dynamic shift in payment preferences. Initially, card payments dominate, showcasing a strong allegiance to traditional payment networks.
Concurrently, bank transfers gain traction, propelled by innovative platforms like Volt and Vyne.
Remarkably, Buy Now, Pay Later (BNPL) schemes soar, indicating a growing appetite for flexible payment solutions.
Additionally, digital wallets emerge as a favorite, simplifying transactions for both consumers and retailers.
Each payment method, with its unique merits, contributes to the vibrant, user-centric e-commerce ecosystem in the UK, fostering a conducive environment for digital commerce to thrive.
Payment by card in United Kingdom
In 2023, the UK’s e-commerce sector witnesses a strong inclination towards card payments. Predominantly, Visa and Mastercard lead the charge. Impressively, 98% of the top 500 online shops offer these payment methods, showcasing a strong trust in established card networks1. Debit cards, in particular, enjoy a significant share. They, along with online payment services like PayPal, top the list of common payment methods among UK consumers2.
Simultaneously, a notable rise occurs in card transactions. Specifically, from July 2022 to July 2023, debit card transactions jump by 4.9%. Additionally, the total spend escalates to £67.8 billion, marking a 4.4% increase3. Notably, despite the global shift towards digital wallets and other modern payment forms, card payments retain a strong foothold. They constitute 57% of the nation’s transactions, underlining their pivotal role in the e-commerce landscape4.
Previously, the UK housed domestic card schemes. However, international cards like VISA Debit and Debit MasterCard now replace them, phasing out local schemes5. Moreover, MasterCard and Visa operate a ‘four-party’ model, further entrenching their presence in the UK market6.
Interestingly, localized initiatives emerge to stimulate local spending. For instance, the High Street Scheme in Northern Ireland issues “Spend Local” cards, aiming to boost the regional economy7. This effort, although not a traditional card scheme, reflects a localized approach to encourage spending.
In summary, 2023 sees card payments continuing to play a central role in the UK’s e-commerce sector, facilitating a thriving digital marketplace. Through established international card schemes and emerging local initiatives, the UK maintains a dynamic, user-friendly e-commerce payment ecosystem.
Payment by bank transfer
In 2023, the UK’s e-commerce sector witnesses a surge in bank transfer payments. Notably, Volt and Vyne spearhead this movement.
Volt, a London-based entity, champions real-time, direct account payments, offering a suite of products for fraud management, real-time reporting, and cash cycle control1.
Meanwhile, Vyne, with a modern approach, covers 99% of retail banking in the UK, offering seamless transactions between consumers and online merchants23.
Their collaboration with Wix expands payment options, promoting instant settlements and refunds4. Collectively, these platforms redefine payment processing, favoring swift, transparent transactions. Through innovation, they significantly contribute to the evolving e-commerce payment narrative, portraying a promising trajectory towards a streamlined digital commerce experience.
Furthermore, traditional payment schemes like Faster Payments, CHAPS, and BACS continue to play a pivotal role.
Faster Payments enables near-instant transfers, ideal for urgent transactions5.
CHAPS provides same-day processing, suiting high-value, time-sensitive payments5.
BACS processes payments over three working days, fitting non-urgent transactions5.
These schemes diversify the UK’s e-commerce payment landscape, catering to varying transaction needs.
Local actors: Bacs, Volt, Vyne, Faster Payments
Payment by installment and BNPL
In 2023, Buy Now, Pay Later (BNPL) flourishes in UK e-commerce. Remarkably, growth soars at 39% annually, doubling market share1. Transaction value escalates, showcasing consumer trust in BNPL2. Over 19 million consumers now embrace BNPL, with 40% being credit cardholders3. Klarna and Clearpay spearhead this trend, capturing a significant user base3. By 2024, BNPL expectedly accounts for 10% of all UK e-commerce sales, hinting at enduring popularity4.
On the B2B frontier, innovative firms like Hokodo and Tranch emerge. Hokodo, partnering with Lemonway, enhances BNPL offerings for B2B marketplaces56. Tranch, targeting SaaS sellers, brings a fresh perspective to B2B BNPL, securing funding to fuel its mission6. These ventures depict a burgeoning B2B BNPL scene, paralleling the B2C sector’s growth.
Collectively, BNPL’s ascent transforms the UK’s e-commerce payment landscape, offering flexible, immediate payment solutions to consumers and businesses alike.
Local actors:
for B2C, AppToPay, Butter, Debite, Deko, DivideBuy, Divido, Duologi, FlyNowPayLater, Funding Circle, Curve, International Personal Finance, iwoсa, Leanpay, Mercuryo, Novuna, Payl8r, Playter
for B2B, Hokodo, Tranch, Tymit
Payment by digital wallet and X-Pay
In 2023, digital wallets redefine UK’s e-commerce, becoming a leading payment method. The previous year saw a 35% e-commerce transaction value from mobile wallet payments, indicating a growing trend1. Among these, PayPal, Apple Pay, and Google Pay dominate, with PayPal being the most used digital wallet2.
Over one-third of UK consumers now prefer digital wallets for online shopping, showcasing a significant shift in payment preferences34.
Moreover, major UK retailers have adapted, now accepting digital wallet payments, further promoting their usage3. The projection for 2025 suggests digital wallets will represent 34.5% of all e-commerce spending, hinting at a continuous upward trajectory4.
This adoption streamlines online transactions, offering a secure, efficient payment alternative, positively impacting the UK’s e-commerce ecosystem.
Local actors: Neteller, Skrill, Sticpay
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