Analogue (cheque) payment volumes fall to 1.5% of volume share

Issue 226 | 29 December 2021

In this edition of Payments:Unpacked we unpack the latest volumes and values of payments processed in the UK through the Bacs, CHAPS, Faster Payments and Cheque schemes.

The volume of digital payments continues to increase with the share of analogue payments (cheques) now equating to just 1.5% of payments.

---

Source:Pay.UK

Bacs Direct Debit and Direct Credit

In the 12 months to the end of November 2021 we see that:

• Bacs Direct Credit volumes are unchanged (12 months to October decreased by 1%)

• Bacs Direct Debit volumes have increased by 2% (12 months to October increased by 1%)

• Total Bacs volumes have increased by 2% (12 months to October increased by 1%)

• Bacs Direct Credit values have increased by 5% (12 months to October increased by 5%)

• Bacs Direct Debit values have increased  by 5% (12 months to October increased by 3%)

• Total Bacs values have increased by 5% (12 months to October increased by 4%)

Volumes for Bacs Direct Credits in November 2021 were 5% greater than November 2020, bringing the year on year change in volumes exactly in line when compared with the 12 months ending November 2020.

The growth in Direct Debit volumes year on year has increased again slightly from 1% back to 2% for the 12 months to November 2021 when compared with the 12 months to November 2020. As Direct Debits account for 70% of Bacs payment volumes, this increase has contributed to the overall growth recorded in Bacs volumes increasing to 2% for this period.

Similarly, month on month values have increased above those seen in November 2020. Year on year growth had been increasing each month but remained steady at 4% for the 12 months to the end of October 2021 when compared with the 12 months ending October 2020. However, with values again increasing in the month, total Bacs values have increased to 5% for the period when compared to the 12 months ending November 2020.

---

CHAPS

In the 12 months to the end of November 2021 we see that:

• CHAPS volumes have increased by 7% (12 months to October increased by 6%) 

This was made up of a 9% increase in retail / commercial based payments and a 3% increase in financial institution payments, compared to 7% increase and 3% increase respectively for the 12 months to October.

• CHAPS values have decreased by 5% (12 months to October decreased by 4%)

This month the change was made up of an 3% decrease in retail / commercial based payments and a 5% decrease in financial institution based payments, compared to 1% increase and 6% decrease respectively for the 12 months to October.

Retail / Commercial payment activity had fallen throughout 2020 – however for the month of December 2020 volumes just crept ahead of December 2019. Volumes fell back again in January but have recovered since as overall activity has increased as restrictions eased in 2021. The comparison in November perhaps reflects the varying conditions as Lockdown 2.0 was in place at this time during 2020. Thus the increased activity this year is reflected with volumes 14% greater in November 2021 compared to November 2020. Values however remain subdued with a fall of 3% for the month of November 2021 compared to November 2020.

The resilience in Wholesale payment volumes has continued although the decrease in value compared to 2020 had continued leading to an overall fall in Wholesale values year on year. This was reversed in November with the value of Wholesale payments for the month showing an increase of 11% compared to November 2020.

---

Faster Payments

In the 12 months to the end of November 2021 we see that:

• Single Immediate Payment volumes have increased by 22% (12 months to October 23%)

• Total Faster Payment volumes have increased by 20% (12 months to October 20%)

• Single Immediate Payment values have increased by 26% (12 months to October 27%)

• Total Faster Payment values have increased by 24% (12 months to October 24%)

The trend has continued in November with both volumes and values significantly ahead of 2020 levels. November 2021 saw an increase of 23% in the volume of Single Immediate Payments processed in the month compared to 2020 and 20% in the value of Single Immediate Payments.

The increased use of faster payments is a digital payment habit that will be here to stay, reinforced throughout each lockdown over the last 12 months and with volumes and values increasing as restrictions have eased. The increased year on year growth for the month of November is as to be expected as conditions differed across the two years. Overall year on year growth is to be expected over the remainder of the year – albeit the trajectory of growth now appears to be flattening.

---

Cheques

In the 12 months to the end of November 2021 we see that:

• Cheque volumes have decreased by 20% (12 months to October 22%).

• Cheque values have decreased by 15% (12 months to October 19%).

Despite the introduction of the image-based cheque clearing system, the volumes have continued to drop over the 12 month period. Volumes processed by the Image Clearing System in November were 12% lower than during November 2020. In August the value increased year on year, although it has fallen each month since that time. This has occurred again in November 2021 with values falling by 3% compared to November 2020. Thus although usage is falling as many have undoubtedly switched to digital payment options, there is some underlying resilience which continues to be seen in this method of payment.

However, with volumes of digital payments continuing to increase, the share of legacy payments within the total continues to fall. For the twelve months to November 2020 the volume of Cheque payments accounted for 2.0% of the total (for Bacs / CHAPS / Faster Payments and Image Clearing System) falling to 1.5% in November 2021.

---

Help grow Payments:Unpacked’s audience

If you enjoy reading Payments:Unpacked please share the word with your friends and colleagues - sharing the newsletter makes such a difference to growing the newsletters audience.

Also, don’t forget to subscribe.

Thanks!

Mike