Most Popular Online Payment Methods in the UK

The UK has over 66 million online shoppers, and though they may share an affinity for digital commerce, they vary widely in their preferred payment methods. Statista examined the shopping habits of these e-consumers and found that PayPal still reigns supreme. However, other payment methods are also on the rise. The research uncovered that:

• 49% of UK digital shoppers prefer PayPal
• 37% of shoppers prefer credit or debit card
• 8% of shoppers prefer mobile e-wallets (Google Pay, Amazon Pay, and Apple Pay)
• 5% of shoppers have no preferred payment method.

To best understand this trend and its implications for merchants looking to maximise their sales, we need to consider why each payment method ranks where it does.

Why PayPal Is the Most Popular Online Payment Method in the UK

PayPal Accommodates Foreign Transactions: PayPal saw more than 330,000 daily active users in 2019—and that’s just in the United Kingdom. Analysts attribute the continued success of PayPal to its cross-border friendliness. A number of smaller countries in the European Union rely on UK-based web stores, and PayPal is extremely accommodating of these transactions.

PayPal Is Seen as Convenient: PayPal is also popular for its low fees and its convenience. Rather than having to enter a 16-digit card number and security information at checkout, shoppers can just log into PayPal and complete their transaction quickly.

Anyone Can Use PayPal: PayPal is also a preferred solution among online sellers who run small businesses and freelance operations. Anyone can accept money via PayPal without the need for a merchant ID, personal payment gateway, or processing bank, meaning that the service is more accessible and affordable to sellers with fewer means.

PayPal Is #1 in Gaming: Finally, PayPal has maintained an edge in the UK on account of its dominance in the online gaming sector. PayPal maintains a relationship with the Gambling Commission and works with licensed casinos throughout Great Britain and Northern Ireland. Considering that the UK’s legal gambling market is worth £14.3 billion annually, it’s easy to see how this pastime may contribute significantly to PayPal’s dominance among online payment methods.

But although PayPal’s popularity remains indisputable, a growing number of merchants are turning to Unicorn Group. That’s because it offers many of the same advantages of PayPal while being more flexible for larger-scale merchants. For example:

• Unicorn Group accommodates foreign transactions worldwide.
• Unicorn Group is suitable for businesses of all sizes.
• Unicorn Group’s digital wallet allows consumers to check out quickly and securely.
• Unicorn Group offers a variety of payment methods to appeal to the widest array of customers.
• Unicorn Group offers mobile-friendly checkout and solutions not just for consumers but also for merchants to manage their business.

When PayPal is no longer enough, Unicorn Group makes things easy.

Why Credit and Debit Cards Are Not the Most Popular Payment Methods in the UK

On the surface, credit and debit cards would seem like the logical choice for the most popular payment method. For instance:

• They’re a universal payment option
• They’re used by young and old shoppers alike
• They don’t require any tech savvy

But while more than a third of Brits do prefer plastic, there are some distinct reasons why a lot of online shoppers are hesitant to reach for their Visa.

Fees: The biggest downside is the non-sterling transaction fees that are imposed on foreign commerce. In the previous section, we noted that much of the UK’s online commerce is cross-border, and this undoubtedly creates some hesitation among shoppers who don’t understand the exchange rates or who just don’t want to make the added investment. The foreign transaction fees can add 1-3% to a typical transaction. Some banks are now waiving these fees, but the waivers can be hard to come by.

Labour Intensiveness: In addition, using a credit or debit card online isn’t as simple as swiping it in a store. The process can actually be rather labour intensive, as noted in the previous section. With PayPal, the transaction is as simple as logging in.

Security Concerns: Finally, there are the security concerns. One survey found that 59% of people in the U.S. and U.K. are uncomfortable sharing financial information over the internet. Manually entering a credit card number and security information may contribute to a greater sense of vulnerability than simply logging in to a PayPal account for checkout.

Mobile E-wallets

Digital e-wallets are the fastest way to pay online. With just a fingerprint or a Face ID confirmation, your transaction is approved. There’s generally nothing to log in to, and there are no numbers to enter.

Of the 8% of UK respondents who chose mobile e-wallets as their preferred payment method, the breakdown was as follows:

• Google Pay (3%)
• Amazon Pay (3%)
• Apple Pay (2%)

Mobile e-wallets have some distinct disadvantages.

Unfamiliar Technology: First, they’re still a new technology. People are notoriously slow to adopt new technologies, which may explain why services like Apple Pay and Google Pay maintain a small (but growing) market share despite their ease of use.

Limited Availability: Another disadvantage is that many online retailers simply haven’t adopted these technologies yet. When consumers have few opportunities to use their e-wallet, they’re more likely to default to other payment methods.

Still, whereas the popularity of PayPal and credit/cards has remained fairly consistent, digital wallets are trending upwards. For example, as of July 2020, Google Pay alone has about 214,000 monthly active users in the UK. We can expect this number to continue to grow.

The Most Popular Online Payment Methods in the UK – What They Mean for Online Merchants

What can ecommerce retailers learn from these trends?

How can you use this information to maximise your sales and customer experience?

Based on the existing data, there are a few important takeaways to consider:

• You must offer a variety of payment methods to appeal to the widest array of customers, particularly those who exist outside the UK. You should offer an array of payment methods (including alternative payment methods) and currencies.
• It’s important to emphasise that PayPal is not a replacement for professional merchant services. For serious businesses, PayPal alone offers more limitations than benefits. Use it as a supplement to your merchant services, not as a primary payment processor.
• A growing number of customers are shopping via their mobile phones. Your storefront and checkout process must be mobile-friendly. Otherwise, customers will lose patience and shop elsewhere. Make sure your site is responsive and your checkout is streamlined. One way to simplify checkout is to incorporate e-wallet services into your store.
• As previously noted, 59% of people are leery about transmitting financial information over the internet. The best way to overcome this objection is to maximise your web security. Ensure that your store is PCI-compliant at all times, use enhanced fraud detection tools, and make encryption a priority.

The best way to succeed in ecommerce is to create an exemplary customer service. By offering all of the most popular online payment methods in the UK, you’re already ahead of the curve.