The future of payments

By comparing and contrasting the UK and Australian markets, RFi Group’s Anna Shaw provides an insight into the future of the payments landscape.

Having spent the last two months in the RFi Group London office, I noticed that the payments landscape is in a different place to Australia.

While there are many similarities in payment methods and digital banking, there are also some key differences, such as how consumers pay for public transport and the availability of Buy Now Pay Later services.

Looking at these differences can provide insight into the future of the payments landscape in both markets.

In both Australia and the UK, debit cards are a key payment method, while cash usage is declining.

Something I observed that I have not yet seen in Australia is that in some cafes and stores in London, cash is not even accepted, which I noticed led to a streamlined checkout experience with minimal waiting times.

When looking at RFi Group data, we can see that debit cards are the second most used method of payment in both the UK and Australia, and 3 in 4 consumers across both markets make contactless purchases rather than inserting or swiping their cards.

Use of contactless is even higher in London (87 per cent) compared to the rest of the UK.

However, when looking at the differences between the two markets, something that stood out to me in the UK was the high usage of mobile payments both to make purchases generally and for public transport.

RFi Group data shows that 1 in 4 (24 per cent) UK consumers have used a mobile wallet before, and over 1 in 10 (12per cent) have used Apple Pay. In contrast, in Australia, usage of mobile payments is 15 per cent, and 9 per cent for Apple Pay.

Usage of mobile wallets is even higher in London, with over 1 in 3 (37 per cent) consumers having using a mobile wallet.

On buses and trains, I regularly saw customers using their mobile phone to pay for their transport rather than using a contactless debit or credit card, or an Oyster card (a plastic card like we have with Opal in Sydney or Myki in Melbourne).

While the UK is ahead of Australia in terms of mobile payment adoption, Australia leads the way when it comes to Buy Now Pay Later services.

This is likely because Londoners have been able to make mobile payments for public transport for five years, with this becoming available on both buses and trains as of 2014.

In contrast, in Australia, this has only become a possibility in Sydney in 2017 for trains and in 2018 for buses, and in Melbourne this became possible for Google Pay users in 2019.

Source: RFi Group’s UK Payments Innovation Council 2019

While the UK is ahead of Australia in terms of mobile payment adoption, Australia leads the way when it comes to Buy Now Pay Later services.

Currently there are over ten different Buy Now Pay Later services on the market in Australia, with Afterpay and Zip the largest players.

Swedish bank Klarna has also launched in Australia through a partnership with the Commonwealth Bank (CBA), and other providers such as Humm, OpenPay and LayBuy are gaining traction.

RFi Group data shows that more than 1 in 10 (15 per cent) Australian consumers uses a Buy Now Pay Later service in a typical month, and this is even higher for millennials.

Australia has seen a steady increase of both awareness and usage of mobile payments between March 2017 and 2019, with awareness increasing from 32 per cent to 78 per cent, and usage increasing from 14 per cent to 28 per cent (again, even higher for millennials).

Source: RFi Group

In comparison, in the UK, the Buy Now Pay Later market is less saturated and there are fewer services available to use.

Klarna is the biggest provider in the UK, and ClearPay (part of the AfterPay Touch Group) has launched earlier this year. Zip has also launched in the UK through an acquisition of PartPay. 

Although the differences in Australia and UK are clear, both markets can be used as insights into the future payments landscape.

I perceive it likely that Buy Now Pay Later services in the UK will grow rapidly, and soon will be in a similar position as Australia, with multiple services available for use with a range of retailers.

Similarly, in Australia, as public transport networks begin to allow contactless cards and mobile payments to be used to pay for transport, mobile payment usage may grow as consumers become increasingly comfortable making payments this way and adopting new payment habits.


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