UK consumers comfortable ditching physical wallets to pay by mobile

By Gloria Methri

• In the last seven days, 80% of UK consumers surveyed reported using contactless payments, compared to 46% of US respondents.
• Half (50%) of UK respondents confirmed their cash usage had decreased over the past year as they grew comfortable with the idea of a cashless society.
• The embedded finance opportunity grows as 20% of UK respondents would consider shifting entirely to a digital-only bank, and 39% would consider using a non-financial provider.

UK consumers are leading the charge on digital financial services adoption amid rising demand for more innovation and convenience in payments and banking, a study from Marqeta shows.

The 2024 State of Payments Report, which surveyed 4,000 consumers across the UK, US and Australia, reveals that the UK is ahead of the US in digital financial services adoption. Eighty per cent of UK respondents reported using contactless payments in the past week, almost double the number reported in the US (46%).

The report further revealed that UK consumers are growing more comfortable with a cashless society, with 50% of respondents “feeling positive” about this shift and 50% decreasing their cash spending in the past year.

UK consumers have also embraced the transition to digital wallets, with almost three-quarters (74%) of those surveyed confirming that they automatically add a new card to their mobile wallet. Forty percent reported using a mobile wallet in the last week, and over two-thirds (68%) feel confident enough to leave their physical wallets at home, demonstrating the societal shift to increased reliance on digital payments.

Demand grows for faster pay

The study also finds that in the UK, existing payment structures are lagging behind the growing consumer demand for instant digital payments. Despite 88% of UK respondents agreeing that getting paid earlier would improve their financial peace of mind, the majority (82%) 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 who are struggling to keep up with the rising cost of living. For example, 36% of UK respondents reported using credit between paychecks and 76% cited often living paycheck-to-paycheck.

“Competition is rife in payments, and there is pressure on payment and financial providers to innovate at the speed demanded by consumers, which means businesses 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 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.”

Banking slower to evolve, but change is underway

Within banking, UK consumers have been slower to adapt to a completely digital offering compared to the trendsetting pace of digital payment adoption. Over half (53%) of respondents reported they had been customers of the same bank for a decade. In comparison, 20% of respondents confirmed they would consider shifting entirely to a digital-only bank, and 39% 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%) citing trust in a brand as a reason for selecting it. As embedded finance becomes more widely adopted and alternative providers more established, digital options outside of traditional banks will likely be more strongly embraced.