The UK appears to be more welcoming of a digital future according to research from Marqeta, the global modern card issuing platform powering embedded finance solutions.
In its fifth annual report, titled The 2024 State of Payments Report, Marqeta revealed that UK consumers are very quickly embracing a digital payment society. Fifty per cent of respondents said they were feeling positive about the changes with a further 50 per cent saying they had decreased their cash spending in the past year. This was considerably more than their US counterparts (31 per cent).
UK approves of contactless and digital wallets
Breaking down the different types of digital payments preferred in the UK and US, Marqeta found that 80 per cent of respondents are using contactless at checkout. This is almost double the US customers’ usage (41 per cent).
Digital wallet popularity in the UK was also uncovered in the Marqeta report. Seventy-four per cent of those surveyed confirmed that they automatically add a new card to their mobile wallet. Additionally, 40 per cent reported using a mobile wallet in the last week. Over two-thirds (68 per cent) feel confident enough to leave their physical wallets at home, demonstrating the societal shift to increased reliance on digital payments.
“Competition is rife in payments, and there is pressure on payment and financial providers to innovate at the speed demanded by consumers, which means business need to offer people more convenient ways to make payments and access their wages,” said Marcin Glogowski, SVP, managing director Europe and UK CEO at Marqeta.
“While traditional banks still have a hold on the UK market, consumers are experimenting with new payment and banking options alongside their traditional banks, and they’re very open to exploring embedded finance offerings from non-financial services companies. This is opening up a world of opportunity for brands that can keep up with the changing preferences and consumer desires around how they want to pay and be paid.”
Out with the old – in with the new
The study also finds that in the UK, existing payment structures are lagging behind the growing consumer demand for instant, digital payments. Despite 88 per cent of UK respondents agreeing that getting paid earlier would improve their financial peace of mind, the majority (82 per cent) still only have access to owed funds at the end of the month.
Providing earlier access to wage programs like Accelerated Wage Access (AWA) could help UK workers struggling to keep up with the rising cost of living. This includes 36 per cent of UK respondents who reported using credit between paychecks and the 76 per cent that cited they often live paycheck-to-paycheck.
Digital payment adoption differs from digital banking adoption
Within banking, UK consumers have been slower to adapt to a completely digital offering compared to the trendsetting pace of digital payments adoption.
Over half (53 per cent) of UK respondents report they’ve been a customer of the same bank for a decade or more. However, 20 per cent of UK respondents confirmed they would consider shifting completely to a digital only bank. Furthermore, 39 per cent would consider using a non-financial provider.
UK consumers value trust above all else when selecting a non-financial services provider, with over half (52 per cent) of consumers citing trust in a brand as a reason for selecting it. As embedded finance becomes more widely adopted, and alternative providers more established, it’s likely that digital options outside of traditional banks will be more strongly embraced.
