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Although there are broad, global trends in consumer payment preferences—for example, the growth of digital payments—it’s also true that each country and region has its own unique payment landscape.
The rise and fall of different payment methods often happen organically, influenced by a confluence of local factors, from technology and infrastructure to cultural habits and traditions.
Whether you’re a UK-based company or want to expand your business to the UK, it’s important to understand the UK payments landscape now and where it’s headed in the future.
Top 10 most popular UK payment methods
1. Credit/Debit Cards
Despite the rise of new, digital payment methods, debit and credit cards remain one of the most popular means of payment in the UK.
One reason for this is the broad demographic of card users. Even if paying by card isn’t everyone’s first choice, almost everyone—from teens to the elderly—is familiar and comfortable with using a debit or credit card.
The three most common types of card payments are as follows:
- Contactless card payments
For brick-and-mortar shopping in the UK, contactless card payments are commonly used for transactions under £100 (the current contactless card). Shoppers simply hover or tap their card on the card reader and, thanks to Near Field Communication (NFC) technology, the transaction is completed in just a few seconds. - Chip/PIN card payments
For larger transactions above the £100 threshold, UK shoppers use the Chip/PIN function of their credit and debit cards. This requires them to insert the card into the card terminal, enter their four-digit personal identification number (PIN) and then remove the card once the payment has been approved. - Online card payments
When shopping online, many UK consumers pay by entering their card details on the checkout page. In recent years, additional security protocols like 3D Secure have made paying by card online much more secure at the cost of being slightly less convenient. Many consumers looking for a faster online shopping experience have switched to digital wallets.
2. Digital Wallets
In the UK and globally, the growth of digital wallets and the rise of mobile shopping are intrinsically linked. Digital wallets work by storing users’ payment details (usually credit or debit card information) and allowing them to make payments using their phones via biometrics (fingerprint or facial recognition).
By using tokenisation to protect sensitive data, digital wallets don’t typically require the same additional security steps seen in standard card payments (e.g. entering a PIN, authenticating via 3DSecure). This makes for a faster user experience that’s even more secure than paying by card.
4. Bank Transfer
Direct bank transfers are commonly used throughout the UK for both peer-to-peer payments and business transactions.
UK banking protocols such as the Faster Payments Service (FPS) make it easy and free for people to send money to other individuals or businesses directly via their online banking dashboard or banking mobile app.
The payer enters the payee’s sort code and account number, along with the transaction amount, and then confirms the payment.
The convenience of this system makes direct bank transfers a much more popular option in the UK than in other places, such as the United States, where transferring funds from bank to bank tends to take longer and is subject to transfer fees.
It’s for this reason that third-party payment apps like Venmo and CashApp aren’t needed in the UK, as direct transfers between banks are already fast and efficient.
5. Cash
It may be headed that way, but the UK is not an entirely cashless society yet. In fact, many Britons still use cash for a range of day-to-day purchases, particularly for smaller transactions at groceries and newsagents.
As you might expect, cash is most commonly used by people who tend to get paid in cash, such as tradespeople, barbers, taxi drivers, and market stall owners.
Cash is also a popular choice for tourists visiting the UK, as it allows them to avoid foreign card transaction fees and makes it easy to stay on budget during their holidays.
6. Buy Now Pay Later
Another payment method quickly rising in popularity, particularly among younger consumers, is Buy Now Pay Later (BNPL) apps like Klarna.
As the name implies, these apps allow shoppers to purchase items on short-term credit, delaying the payment by 30 days or splitting it into multiple, smaller instalments.
Although BNPL services function in a similar way to credit cards, most don’t require a hard credit check and are much more accessible than the traditional credit lending process.
They are a convenient way for UK consumers to budget for purchases—particularly for larger transactions, like furniture or electronics—while on a fixed monthly income.
Find out more about BNPL
7. Gift Cards
Many merchants across the UK, particularly retail and hospitality businesses, give customers the option to purchase gift cards or vouchers for goods and services.
Gift cards work by preloading a specific value that the recipient can redeem in-store or online. This functionality can be integrated into the merchant’s payment system, allowing gift card payments to be processed seamlessly alongside other payment methods.
Gift cards can be purchased online or in person from brick-and-mortar stores. Increasingly, both merchants and consumers prefer the convenience of digital gift cards that are sent via email rather than physical, plastic cards or handwritten paper vouchers. However, many businesses will still post physical gift cards if that’s the preferred option.
One consideration for merchants that sell gift cards is the impact this advancement of funds can have on cash flow.
Retailers and hospitality businesses often see a large uptick in gift card sales around the holidays, or while running special promotions, which brings in a short-term influx of revenue. It’s important to plan ahead to ensure that significant stock and resources are available when customers begin to redeem their gifts.
8. Prepaid Cards
Prepaid cards function in a similar way to gift cards in that, as the name suggests, they are preloaded with a set amount of funds. However, with prepaid cards, people often reload funds for ongoing usage.
Another key difference is that most prepaid cards in the UK are backed by Visa or Mastercard, allowing them to be used at a broad range of retailers rather than with just one, specific company.
UK consumers use prepaid cards for a variety of reasons, including to help them budget by limiting their spending, as a payment method for teenagers who aren’t ready for a bank account, and as a way to avoid foreign transaction fees when travelling.
Popular prepaid cards in the UK include:
- Tesco Clubcard Pay+ - allows users to preload funds and earn rewards while shopping
- HyperJar - allows users to organise spending into "jars” for better budgeting
- Ode cards - typically used for employee rewards and corporate gifting
9. Direct Debit
In the UK, Direct Debit is a widely used payment method for recurring payments, such as utility bills, home rental payments, gym memberships, and subscriptions.
With Direct Debit, the payer authorises the payee’s bank to take payments per an agreed-upon schedule (e.g. on the 1st of every month). It’s a convenient way to ensure bills and other recurring fees are paid on time.
10. Cryptocurrencies
Although paying for goods and services using cryptocurrencies is not mainstream in the UK, it’s an alternative payment method that’s rising in popularity thanks to more advanced payment processing technology and user-friendly cryptocurrency digital wallets.
As the infrastructure becomes more accessible, an increasing number of merchants across the UK are choosing to accept cryptocurrency payments.
Discover how you can accept all major payment types
Expanding payments beyond borders
While it’s useful for UK business owners and managers to understand the payment preferences and habits of Britons, it’s also crucial not to take too narrow a view and assume the payment preferences at home are the norm elsewhere.
This is particularly true for businesses in the hospitality industry that cater to people travelling from abroad.
For businesses that wish to expand their reach beyond the UK and tap into new markets, it’s worthwhile to consider the following:
1. Regional payment schemes
Many countries have unique local payment networks that are widely used within their borders.
For example, the main online payment method used in the Netherlands is iDEAL, which enables users to pay for goods and services directly from their bank accounts.
Similarly, Belgium has Bancontact, its own card scheme, uniquely used within its borders. These country- and region-specific payment methods exist throughout the globe and are important to keep in mind when expanding to new markets.
2. Asian digital wallets
Although ApplePay, Google Pay and PayPal may dominate the European digital wallet market, that isn’t the case elsewhere in the world.
In China, for example, AliPay and WeChat Pay are not only the two most popular digital wallets but account for the vast majority of all payments made by Chinese consumers. With a combined user base of 2.5 billion, they represent a significant portion of the global payment market.
3. Integrated currency conversion tools
In addition to factoring in payment habits and preferences across the globe, it’s crucial for global businesses to consider the issue of currency.
Not only do today’s consumers want to pay using their preferred payment method, but they’d also like to make the payment in their preferred currency. Tools like Dynamic Currency Conversion (DCC), Multi-Currency Pricing, and Multi-Currency Processing automate the conversion process and enable consumers to pay in their home currency.
Embrace every payment preference with Planet
Businesses need more than just a “cash or card” option to thrive. With consumers expecting flexibility and convenience, the ability to accept all major payment methods isn’t just a perk—it’s essential for growth.
At Planet, we specialise in simplifying this complexity for businesses, providing a comprehensive payment solution that enables you to meet your customers' diverse needs. From mobile wallets to international cards, Planet’s end-to-end processing system makes accepting all major payment methods seamless and efficient, freeing you to focus on what matters most: your business.
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