Just 1.2% of the payments mix - what should the future hold?

Issue 420 | 26 November 2022

Payment rails - systemically important plumbing

Every time anyone uses a cash machine, transfers money, uses contactless, or gets paid, they use a payment system.

Payment System Regulator

The Bacs, Faster Payments and cheque clearing payment systems operated by Pay.UK process almost 11 billion transactions every year.

Here’s the latest data published by Pay.UK:

Source: Pay.UK

But how much do you know about these systemically important payment systems?

What should the future hold for cheques? “Don’t kill off the cheque” or “Donate to the museum of curiosity” - vote in the poll below!

If numbers and values are your thing here’s all you need to know¹.

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Cheques represent just 1.2% of the payments mix

In the 12 months to the end of October 2022:

• Cheque volumes have decreased by 13% (12 months to September 14%).

• Cheque values have decreased by 7% (12 months to September 8%).

Cheque volumes processed by the Image Clearing System in October were 15% lower than during October 2021 with values also decreasing by 3% in the month. Although volumes are falling as many have undoubtedly switched to digital payment options, there is an underlying level of usage which continues to be seen in this method of payment.

With volumes of digital payments continuing to increase, the share of legacy payments within the total continues to fall. For the twelve months to October 2021 the volume of Cheque payments accounted for 1.6% of the total (for Bacs / CHAPS / Faster payments and Image Clearing System) falling to 1.3% for the 12 months to October 2022.

For the month of October itself the percentage had fallen to just 1.2%!

More: Don't write off our cheques! (or has that ship already sailed?)

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Faster Payments volumes continue to rise

In the 12 months to the end of October 2022:

• Single Immediate Payment volumes have increased by 19% (12 months to September 18%)

• Total Faster Payment volumes have increased by 17% (12 months to September 16%)

• Single Immediate Payment values have increased by 26% (12 months to September 24%)

• Total Faster Payment values have increased by 24% (12 months to September 22%)

The trend has continued in October with both volumes and values ahead of 2021 levels. October 2022 saw an increase of 24% in the volume of Single Immediate Payments processed in the month compared to 2021 and 40% in the value of Single Immediate Payments.

The widespread use of Faster Payments is a digital payment habit that will be here to stay, reinforced throughout each lockdown and with volumes and values continuing to increase month on month.

Although the trajectory has flattened a little particularly when similar conditions have been in place, an overall significant increase year on year looks set to continue for some while to come – particularly with inflationary pressures also having an impact on the value of payments processed.

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Volumes of a 55 year old payment method grows by another 3%