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A record number of payments being processed in the UK in 2024, a payments industry trade body has predicted.
A rise in the number of transactions made via credit and debit cards, the internet and mobile devices will lead to a record number of payments being processed in the UK in 2024, a payments industry trade body has predicted.
Payments UK said that it anticipates only a slight rise in the average number of payments each UK adult consumer will make a year by 2024 compared to 2014, from 656 to 679 payments, but that it expects consumers to move away from using cash and rely instead on other means of payment instead over the next decade.
The number of cash and cheque payments made annually by UK adults is likely to fall over the next decade, Payments UK said. Next year it is expected that the total volume of all non-cash payments made by consumers will exceed the volume of consumer cash payments for the first time, and by 2024 it is anticipated that cash payments will account for just a third of all transactions made in the UK, the trade body said. In 2014 cash payments accounted for 53% of the market.
An all-time record 44 billion payments will be made in 2024, up 3.4 billion over 10 years, equating to 120 million payments per day, Payments UK said. The increase will be driven by rises in card, internet and mobile banking payments.
Financial services and technology law expert John Salmon of Pinsent Masons, the law firm behind Out-Law.com, said the payments market will be subject to significant reform as a result of impending new EU legislation, the second Payment Services Directive (PSD2). Pinsent Masons is hosting its Global Payments Conference in London on 17 November 2015 where the PSD2 reforms will be a main topic of discussion.
PSD2, now finalised, will open up the payments market to new businesses, Salmon said. A greater number of companies will be involved in the processing of payments, creating greater competition in the market and posing a threat to existing business models but also opportunities for new players in the sector.
This is because the new regime envisages alternative ways for consumers to pay and to gain control over their financial data through technology like APIs on the basis of customers consent, he said. The opportunity also remains for banks to move first and provide customers with the services that PSD2 will be opening up to other players.
Contactless payment technology and growth in the e-commerce market will see debit cards become more popular for making payments over the next decade, Payments UK said.
Cards (both debit and credit) accounted for 51% of the volume of non-cash payments in 2014, but by 2024 they are projected to account for 60% of non-cash transactions, Payments UK said. Within this, the volume of debit card purchases is expected to grow from 9.2 billion in 2014 to 16.0 billion in 2024.
The Faster Payments payment system is also likely to become busier as consumers increase the number of automated credit payments they make, Payments UK said.
In terms of percentage growth in payment volumes, the strongest growth over the next ten years will be experienced by one-off automated credits processed through the Faster Payments Service, which is forecast to nearly double by 2024, it said.
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