It’s easier than ever before to make purchases online. Whether it’s the weekly grocery shop, purchasing a new outfit or booking a holiday, Brits just love to shop on the internet. But when it comes to actually handing over the cash, there are so many different options to choose from. Let’s take a look at the most popular online payment methods among British consumers today, as well as peering beyond the horizon to see what the future holds.
Ecommerce in the United Kingdom
According to Worldpay’s Global Payments Report for 2021, the UK’s ecommerce market is already the third biggest in the world, and is expected to grow to a massive £264 billion by the year 2024. The report, which surveyed the spending habits of 46,000 consumers, illustrates just how quickly we are shifting to a more digital focus, a process which has most likely been accelerated by the events of the recent COVID-19 pandemic.
By 2024, it’s thought that more than one-fifth of all UK purchases will be carried out over the internet. But when people are spending online, what are the actual payment methods being used? And will these trends continue in the coming years?
Let’s take a look at the most commonly used payment options among consumers in the United Kingdom.
Paypal
Most Brits prefer to pay for their online shopping with PayPal. An ecommerce poll revealed that almost 41% of British consumers had used the digital wallet for their transactions in 2018. Paypal’s early association with E-Bay in the 2000s made the service a household name, which certainly goes a long way to explaining its popularity. But the product itself just works so well that it was always destined to become a success.
The benefits of using such online wallets are clear for all to see, including enhanced security, low fees and just the sheer convenience on offer.
Other e-wallets
PayPal is not the only digital wallet used by British consumers, but the likes of Neteller and Skrill have a much lower market share. Both of these e-wallets are closely associated with the gambling industry. In fact, in the year 2000, Neteller was responsible for 80% of online wagering transactions around the world.
Since Neteller pulled out of the American market in 2007, punters looking to play at US betting sites had to look elsewhere for payment options. Comparison sites help players to find sportsbooks which offer their preferred alternative to Neteller, whether that is debit cards, e-wallets or cryptocurrency. But that’s not all. Such sites also greatly assist with finding the best bonuses and promotions, as well as helping us understand any terms and conditions attached. They also reveal blacklisted sites and licensing information, helping to keep us safe.
But moving back across the pond to Blighty, other up-and-coming minority e-wallets to watch out for include R Pay, Lemon Wallet, PayToo and Venmo.
Buy now, pay later
Worldpay’s 2021 report found that BNPL (Buy Now, Pay Later) is actually the fastest growing payment method in the UK right now. This trend is not expected to slow down any time soon either, with estimates suggesting that BNPL services will enjoy year-on-year growth of 29%, rising to £26.4 billion and doubling its share of the market by 2024.
It’s thought that 37% of British shoppers have taken advantage of Buy Now, Pay Later services, with as many as 9.5 million stating that they would actively avoid a retailer which did not offer such a service upon checking out.
Credit and debit cards
Although alternative payment methods are certainly on the rise, plastic is not likely to be killed off any time soon. Debit and credit cards follow closely behind PayPal, as the UK’s second and third most commonly used payment methods for online shopping.
Contactless technology has undoubtedly contributed to helping plastic remain relevant, despite the country’s obvious shift towards a more digital payments framework.
Bank transfer
Seen as a slow and cumbersome payment method, usage of the bank transfer has been in decline until quite recently. But improvements to the UK’s network of peer-to-peer transfers, allowing for real time transactions, has seen something of a resurgence.
In 2018, 13% of Brits said they had made use of a bank transfer, and in December 2019, the Faster Payments Network reported that they had dealt with more than 226 million payments in a single month. As technology continues to improve, reducing payment times to effectively zero, this could be a payment method which continues to grow in the coming years.
Digital payments
Mobile wallets are very much on the rise in the United Kingdom, with the emergence of Google Pay, Apple Pay and Amazon Pay. However, for now at least, the bulk of the transactions made using such digital payment solutions took place in retail stores.
That said, experts believe that by the year 2024, around 40% of all UK-based transactions, either in physical retail outlets or on the internet, could be facilitated by mobile money solutions. Such systems are already extremely popular in Africa and Asia, and it seems like it’s only a matter of time before the Brits catch up.