Market Trends of United Kingdom Mobile Payments Industry
This section covers the major market trends shaping the UK Mobile Payments Market according to our research experts:
Internet Penetration in the UK is Driving the Market
- The cellular and internet connectivity advancements have backed several commercial and private operations in the UK. The country has witnessed drastic internet and network infrastructure evolution, leading to fast-growing network capabilities. This evolution has backed a deeper penetration of the internet, covering the interiors of the country too. Strong network infrastructure is a fundamental requirement for reliable mobile payments.
- Smartphone adoption on a wide scale has helped people connect with the internet and use mobile payments. The United Kingdom has shown promising prospects for the same. According to the International Trade Administration, in 2021 in the UK, the population accounted for around 68.05 million, comprising mobile phone connections to be approximately 67.61 million, with about 65.32 million internet users. Such a deep internet penetration in the country lays the foundation for the wide-scale adoption of mobile payments.
- Further, the telecom providers are constantly putting their efforts into strengthening the connectivity and robustness of the network through significant changes and updates. The companies are preparing to expand 4G connectivity to existing regions and other deeper parts of the country, laying the foundation for 5G expansion through hardware upgrades.
- For instance, in March 2022, a significant telecom operator in the UK, EE, deployed 200 small cells throughout its network to enhance 4G coverage in Leeds, London, and Manchester. The company also plans to install several more over the following 18 months for the small cells to use licensed 1800 MHz and 2600 MHz spectrum bands, along with unlicensed 5 GHz.
- The increasing number of such developments in the country would make mobile payments an indispensable part of the lives of UK citizens, inviting more companies to enter the fintech space. The government norms play a vital role in facilitating the shift and encouraging mobile payments. For instance, in March 2021, the Financial Conduct Authority (FCA) confirmed the extension of the contactless payment limit from GBP 45 to GBP 100. The limit was earlier revised from GBP 30 to GBP 45 in April 2020. Mobile payments will be crucial in several digitalizing processes for different business sizes.
Understand The Key Trends Shaping This Market
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Growing E-commerce to Dominate the Market
- The growing e-commerce in the UK has deeply impacted the use of mobile payments. The ease of payment through the mobile payment method is preferred over the conventional payment method. Businesses are switching to digitalization at different levels, including payments.
- According to International Trade Union (ITU), the consumer eCommerce in the country accounted for 36% of the total retail market, with the weekly internet retail market accounting for USD 3 billion in 2021. The observed boost has resulted from the pandemic motivating consumers to choose online shopping over offline options. However, the offline stores too are connected to cloud software services for maintaining the payments and accounts.
- The great number of discounts, regular sales, and other benefits for attracting consumers are responsible for the aggressive adoption of online shopping portals by consumers. Several banks collaborate with the shopping portal and mobile payments partners to provide lucrative offers for the buyers to benefit all the partners, including themselves. The online payment service providers are also offering Buy Not Pay Later (BNPL) options for added convenience of mobile or online payments. Thus, the banks and online portals play their part in encouraging online and mobile payments over cash.
- The gaining popularity of online shopping portals mostly includes mobile and online modes of payments due to frequent cashback and benefits offered by the vendors. Hence, the online traffic attracted by e-commerce websites is indicative of the consumers' preference for mobile payments. Similarly, the popularity of the shopping portals follows the collective adoption trends of digitalization of the circular economy. For instance, according to ITU, the estimated monthly traffic on Amazon accounted for 437 million visits.
- The paradigm shift observed in the UK, with people going cashless to cardless, drives the market. E-commerce completed the economic circle that is perfectly complemented by mobile payments. The growing popularity of wearables among consumers and other handy devices is also driving the market's growth in the United Kingdom.
