UK leads the way in cashless payments, outpacing the US

Marqeta's recently released State of Payments Report reveals a significant shift towards cashless transactions among UK consumers, with findings suggesting that the UK is outpacing the US in the adoption of contactless payments and digital financial services.

According to the survey, which polled 4,000 individuals across the UK, US, and Australia, 80% of UK respondents reported using contactless payments in the past week. This figure is nearly double that of US respondents, where only 46% indicated they had used contactless methods within the same timeframe.

The survey also found that a striking 68% of UK respondents now feel confident enough to leave their physical wallets at home. In contrast, a notably lower percentage of US respondents share this sentiment. As cash usage diminishes, 50% of UK participants reported reducing their cash spending over the past year, compared to 31% of those in the US.

Marcin Glogowski, SVP and Managing Director Europe, as well as UK CEO at Marqeta, commented on the growing competition in the payments market and emphasised the need for innovation. "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," Glogowski stated. He noted that while traditional banks continue to dominate, consumers are increasingly open to exploring new payment and banking options, including those from non-financial services companies.

The research highlights a noteworthy interest in the potential of digital-only banks and embedded finance opportunities in the UK. Approximately 20% of UK respondents expressed willingness to shift entirely to a digital-only bank, and 39% would consider utilising services from a non-financial provider. These figures illustrate a growing inclination towards innovative financial solutions, driven by the desire for convenience and flexibility.

Trust remains paramount for UK consumers when selecting non-financial service providers, with 52% of UK respondents citing trust in a brand as a critical factor. This suggests that as embedded finance solutions and alternative financial providers gain credibility, they could see increased adoption among UK consumers.

However, the transition to digital banking has been slower compared to the rapid adoption of digital payment methods. Over half (53%) of UK respondents have been loyal customers of the same bank for more than a decade. While this indicates a cautious approach towards fully digital banking, it also presents opportunities for digital-only banks to build trust and attract these customers.

The survey further uncovers a strong demand for faster access to wages in the UK. A significant 88% of respondents believe that receiving their earnings earlier would enhance their financial well-being. Despite this, the majority (82%) still receive their wages on a monthly basis. Early wage access programs, such as Accelerated Wage Access (AWA), could potentially address the financial concerns of many UK workers, especially the 36% who use credit between paychecks and the 76% who often live paycheck-to-paycheck.

Overall, the findings from Marqeta's State of Payments Report underscore the UK's leadership in embracing digital financial solutions, according to the researchers. This trend reflects broader shifts towards cashless and more digital-centric economies, driven by consumer preferences for convenience, speed, and financial services.