Alternative payments are taking over – and with it, the ease with which we can purchase goods and services. In the last couple of years alone, there has been an increased adoption as consumers seek to make their shopping and entertainment experiences as sleek as possible.
More merchants are catching on and catching up – making huge changes to the range of options they offer. How are we faring in the UK? Do we shy away from using digital methods – or are we grasping them with open e-wallets? Let’s take a look.
Digital payments in the UK
It’s clear that digital payments for goods and services in the UK are really taking hold – and we’re not afraid to try them. E-commerce transaction value reached £305,738 million in 2022 – accounting for a 16% increase in the previous year.
The UK has long been ahead of Europe in its keenness to adapt to digital payment tools, and as a country, we’re recognized for our willingness to try new innovations that make payments for goods and services much easier. In fact, in 2022 the UK we were placed third behind the USA and China in terms of digital payment transactions.
Digital pay methods examined
How and what are we using in terms of digital payments? Let’s take a look at some of the methods we’re keen on in the UK and how we use them.
First are blockchain and cryptocurrencies – it was in 2021 that the UK got more interested in these two forms of digital payment. It had taken a while to hook us in, but now we’re adopting them with more regularity and openness.
The decentralised nature of this tech is being investigated more and studied by banks and investment companies with interest, though experts feel there’s a long way to go before it’s more widely adopted. One area in which these currencies work well is for those people who are interested in online gaming because it makes it much easier to find safe spaces to play and use instant withdrawal casino games – players feel their money is safer and their transactions are easier to keep track of.
Over the next decade and a half it’s expected that this form of tech will really start to revolutionise the way we pay for goods and services in the UK, not to mention the way we bank too. One surefire sign it’s happening is that bitcoin has gained support on debit and credit card platforms such as Visa and Mastercard, as reported by Forbes – and we’re now seeing more companies accept it too, from PayPal through to Microsoft and even high street chains like Starbucks.
The second way in which we’re adopting digital payments are through the wider range of ‘Buy Now Pay Later’ schemes. These have been a big hit worldwide and the main reason for this is the safety net they offer with their interest-free repayment scheme, meaning it’s easier to make purchases of goods and services and budget wisely for them – especially for those people making high-volume and high-value purchases.
However, in 2023 new rules and regulations came into force in the UK concerning security – and worries about the numbers of consumers getting into debt by using these schemes, meaning their growth over the last year has stagnated somewhat – though still remains relatively buoyant, given the nature of the current cost of living crisis.
The third example is something very new – known as ‘Payment Orchestration and Smart Routing’. The biggest players in e-commerce are adopting this and as a result more consumers in the UK are looking into trying it out for themselves. It uses Dynamic Routing technology, driven by AI and involves the integration of multiple payment partners on one shopping platform. It does have a few advantages.
The first of these is it offers an increased conversion rate because consumers have a better payment experience. Secondly, there are far fewer failed transactions – and this is down to the dynamic routing tech.
Thirdly, consumers are offered an automatic conversion of currencies which means it’s easier to make international purchases – and this also means there are reduced fraud capabilities because it uses machine learning and transaction risk analysis in its application.
Lastly, because everything is based on machine learning it means that tasks such as automatic reconciliation and reporting are carried out automatically, freeing up more time for merchants to work on other tasks.
The downsides to this technology at the moment are really centered on lack of use and adoption – it’s still relatively early days. Therefore whilst it’s safe and secure, not everything on these systems is optimised and ready to use.
As a country, we might not be leading the way when it comes to digital transactions – but we’re certainly not afraid to adopt and experiment with them. Over the next few years, it’ll be interesting to see how far we go!
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