The 2019-20 stats also show an ongoing decline in Direct Debit use as cash remaining a key focal method with a steady rise in Bank Transfer, Credit Card and Standing Order payments over the past three years.
Monthly payments were the most popular frequency in all household bills, although the stat show payees have increased their preference in quarterly and four-weekly payments - quarterly instalments for Rent (61%) and Council Tax (50%) significantly increased year-on-year.
The stats are shown in the latest annual consumer survey carried out by allpay and TLF research as insight into payment behaviours for UK household bills.
The responses showed the need to retain flexibility on every aspect of bill payment methods, including frequencies. Keeping in step with our customer's preferences has always been key to us in allpay and we are innovating and communicating about new ways of paying bills without such a reliance on cost-intensive cash offices which bring with them a host of additional challenges during the current pandemic.
The survey findings for 2019-20 confirm that over consecutive years there is reduced consumer confidence in paying household bills - with the ongoing decline in the Direct Debit uptake and a continuing need for cash across the market.
Pre-pandemic, the survey took in more than 2,000 respondents UK-wide varying household status to find fewer people were fully confident in managing money and paying their household bills, with a year-on-year decline of 2% to just 78%.
Respondents referenced “ease of use” as the most common reason when choosing their payment method and nearly 1,000 respondents said that reminders via text or email would make paying their household bills easier.
“Cash continues to be relied on by a significant number of payees, representing an average of 7% for each bill payment.
“With many businesses moving towards a cashless society, the stubborn rate at which the method remains showcases its value to many in the UK payments space.
This years’ results demonstrated that 13.5% of rent payments alone were made utilising cash, with more than 75% of these made at business offices - often cited as a cost-intensive source” said Mary Cotton, Head of Operations, allpay Limited.
The stats show Direct Debit is still the most popular payment type across all household bills, with an average take-up of 55%, though usage decreased by 5% across three years.
Rent payments registered the lowest share against all other bills (26%), with the most popular across Internet & Phone (70%) and Electricity & Gas (61%) bills.
Debit Card payments are the second most popular payment method, despite showing a small decline (5%) on average per bill from last year.
Take-up for the second consecutive year is highest in both Rent and Insurance payments, with the use of Credit Cards the largest increase of all payment methods across the three years (2.2%).
Monthly payments continue to be the most popular frequency in all household bills, although payees have increased their preference in quarterly and four-weekly payments.
Quarterly instalments for Rent (61%) and Council Tax (50%) significantly increased year-on-year.
Stats specific to the social renting sector show all payment channels increased - with the exceptions of Direct Debits (-4.9%) and Cheques (-0.7%)
But even seeing a steep decline, the survey shows Direct Debits as still the most favourable payment method at 38.6%.
Debit Cards (1.6%), Credit Cards (1.2%) and Standing Orders (1.1%) recorded the largest increases.
Cash remains a key part of bill payments for social renters – with nearly 12% using this method of payment with 80% of cash payers choosing a Post Office, PayPoint or Payzone outlet when making their payment.
Some 60% of cash rent payments were made via Post Office, Payzone or PayPoint outlets.
Cash users referenced “ease of use” as the reason why they went with their payment method.
Several respondents said text or email reminders would make paying their household bills easier.
For Debit Card and Direct Debit, social renters cited the “Ease of Use”, “Security”, “Trust” and “Reliability” as the reasons when choosing how to pay.
allpay/TLF Consumer Survey 2019-20: Key Findings
- Credit Cards, Standing Orders and Bank Transfers provide the three largest increases across 2018-2020
- Cash payments remained static across the 3 years – representing 7% average across each bill
- Debit Card usage increased slightly across the 3 years – albeit a small decline YOY (2019-2020)
- Notable 3-year increase in Mortgage payments
- Credit Card usage has increased the most out of all channels – 2% on average across each bill from 2018-2020
- Direct Debit is most popular for the third year running – although averages fell by 5% across each bill
- Rent and Insurance payments lost 15% and 10% market share across the 3 years
- Direct Debit take-up is highest amongst Electricity, Gas and Internet/Phone – with more than 60% of respondents opting for the channel
- Rent has the lowest Direct Debit take-up across all household bills – standing at 26.5% with a loss of nearly 15% market share over 3 years
- Next lowest share sits with Insurance at 47.5%
- Bank Transfer, Cash, Cheque and Credit Cards all increased their average market share year-on-year
- Credit Card usage increased by nearly 49% YOY for Council Tax payments
- Company offices to make cash payments increased across all household bills
- A 46% year-on-year increase for rent – with only 24% making payments at PayPoint, Post Office and Payzone
- Respondents referencing “ease of use” as the most common reason when choosing their payment method
- 998 respondents said that reminders via text or email would make paying their household bills easier
- The usage of PayPoint, Post Office and Payzone declined across every household bill – with Cash Office payments taking preference
- 76% of cash payments for rent taking place at Cash Offices
- More than 50% of Council Tax payments remain at PayPoint, Post Office and Payzone outlets – a 7% decrease over the past three years
o Paying Online continues to be the most favourable method for those paying by Debit Card – with the usage of Mobile App’s increasing rapidly
o Mobile App usage for Debit Card payments has increased significantly across Water Bill (83%), Rent (100%), Mortgage (90%), Council Tax (58%), TV Licence (46%), Insurance (45%), and Internet/Phone (72%)
- The significant decline in the set-ups of Direct Debits – reflected in the decrease of overall respondents utilising the payment method across each of the household bills
- Set-ups of Bank Transfers has considerably increased – reflected in the sharp rise in Bank Transfer payments for all household bills