Buy Now, Pay Later schemes growing at 39 percent annually in the UK, and set to double their market share by 2023.
UK eCommerce market set to surge 37 percent to £319.8 billion by 2023
Digital wallets set to account for one-third of UK online payments by 2023.
The UK’s eCommerce market, currently the third largest in the world, is set to be worth £319.8 billion by 2023, according to a new report from FIS (NYSE: FIS), a global leader in financial services technology.
The newly released Worldpay from FIS 2020 Global Payments Report found that eCommerce growth in the U.K. is being fueled by online sales through mobile devices, which are increasing 13 percent per year, while desktop-based purchases are advancing at six percent. Meanwhile, “Buy Now, Pay Later” (BNPL) services are the fastest-growing online payment method in the UK, growing twice as quickly as bank transfers and more than three times the rate of annual growth in digital wallets, according to the new report.
The Worldpay data shows that BNPL options are growing 39 percent in the UK and are on course to double their market share of online purchases in the country by 2023. BNPL payment services such as Afterpay or Klarna allows consumers to delay payment or to pay by instalments over a set period.
The new Worldpay report highlights the growth of digital wallets in the U.K., which are set to become the most popular online payment method by 2023, accounting for 33 percent of the market. Digital wallets are also the fastest growing payment method in-store, growing 20 percent annually, the new report found. Globally, digital wallets are forecasted to grow to 52 percent of the eCommerce market by 2023, according to the new Worldpay report.
“Convenience is the driving force behind the boom in digital and mobile wallets,” said Shane Happach, EVP, head of global eCommerce, Worldpay Merchant Solutions, FIS. “Global consumers now expect convenient and connected, omnichannel experiences. ‘Buy Now, Pay Later’ delivers a more intuitive level of convenience and access for consumers than traditional credit cards. As digitally savvy Gen Z consumers come of age, this is especially significant as younger consumers are more used to making snap purchases and then deciding later if they want to keep it.”
While Britons are not likely to go cashless in the near future, the new FIS report shows that digital and card-based payments are rapidly becoming the preferred choice across all sales channels. In the UK, cash is in steep decline at a rate of -10 percent annually and is predicted to account for only 16 percent of offline sales by 2023.
“We are reaching a tipping point for eCommerce,” Happach said. “Advanced technologies from voice-enabled commerce to biometric verification are maturing at the same time as digitally native demographics are coming of age and becoming regular consumers. Merchants looking to remain relevant must establish user-friendly applications, deploy omnichannel best-practices that deliver personalization at scale, and reduce friction through the shopping experience.”