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Payment preferences in the UK: 2019 - 2020 snapshot

What if we asked you to buy what we're selling right now?

It’s too soon. This could be the first time you’ve ever come across whatever product or service we're peddling. The purchasing cycle for a new product or service, whether we’re talking about consumers or businesses, can be long and complex. Not always, but it can be (particularly within the B2B space). So you want to get it right.

There’s one factor in this process that you might be undervaluing right now - the payment experience. Amy Konary, VP of Business Innovation at Zuora and Chair of the Subscribed Institute says:

“Today’s customers expect more than just a great product… They are rejecting the traditional “one size fits all” approach and embracing personalised services… Give me what I want, when I want, how I want, is the mandate. They want the freedom to consume on their terms. Their need for freedom and choice extends to payments as well.”

By failing to account for the payment preferences of your customers, all the time and money you spend nurturing them through your marketing and sales funnel could be for nothing. Your competitors who offer them a superior payment experience - that is, a superior customer experience - are going to take your customer instead.

But if you account for payment preferences within your market, you can increase your conversion, improve customer loyalty, and ultimately reduce your churn.

Below we’ve collated payment preference data, provided by YouGov, for both recurring business payments (B2B) and recurring consumer payments (B2C) in the UK.

Recurring payment preferences of UK businesses

UK businesses express a clear preference for bank-to-bank payment methods such as Direct Debit and bank transfer. In three out of four common recurring payment use cases (that is, regular business bills, invoices, digital subscriptions, and instalments), Direct Debit is the preferred payment method. Bank transfer is the leading preference for invoice payments.

More than half of UK businesses are likely to choose Direct Debit to pay for regular business bills, less than half are likely to choose it to pay instalments, and a little less than that are likely to choose it to pay digital subscriptions.

A notable segment of UK businesses demonstrate dual preference for both Direct Debit and bank transfer. For regular business bills, 71% of UK businesses indicate they are equivalently likely to pay by bank transfer and Direct Debit. 52% indicate the same for invoices, two-thirds for digital subscriptions, and two-thirds for instalments.

Corporate cards are notably less preferred in the UK, with around one-third or less of businesses likely to use them in any of the four most common recurring payment use cases.

Digital wallets like PayPal are least preferred, with preference well below 20% across the board.

Regular business bills

e.g. utility or insurance bills

Payment method Unlikely to use Neutral feeling Likely to use
Corporate card 38% 28% 27%
Direct Debit 13% 23% 57%
Bank transfer 17% 31% 47%
Digital wallet 54% 24% 14%

Invoices

e.g. from accountants or marketing agencies

Payment method Unlikely to use Neutral feeling Likely to use
Corporate card 29% 32% 33%
Direct Debit 25% 28% 40%
Bank transfer 10% 25% 59%
Digital wallet 52% 24% 16%

Digital subscriptions

e.g. products like cloud storage software

Payment method Unlikely to use Neutral feeling Likely to use
Corporate card 28% 28% 34%
Direct Debit 20% 28% 44%
Bank transfer 22% 32% 38%
Digital wallet 52% 22% 16%

Instalments

e.g. paying off business loans

Payment method Unlikely to use Neutral feeling Likely to use
Corporate card 38% 26% 28%
Direct Debit 19% 25% 48%
Bank transfer 20% 30% 41%
Digital wallet 54% 23% 13%

Recurring payment preferences of UK consumers

In the UK, consumers favour Direct Debit as a payment method across all four common recurring purchase use cases.

Nearly half of consumers are likely to choose Direct Debit to pay for traditional subscriptions, compared to a third who are likely to choose debit card, and 12% who would opt for digital wallets like PayPal.

While debit cards are often considered the dominant payment option for online subscriptions in the UK, the research shows only a third of UK consumers are likely to choose it: nearly half are likely to choose Direct Debit instead, less than a quarter would choose credit cards and 16% digital wallets.

Online subscriptions

e.g. Netflix or Spotify

Payment method Unlikely to use Neutral feeling Likely to use
Credit card 54% 21% 19%
Debit card 35% 27% 32%
Direct Debit 25% 25% 45%
Digital wallet 56% 23% 16%

Household bills

e.g. energy bills

Payment method Unlikely to use Neutral feeling Likely to use
Credit card 60% 22% 13%
Debit card 32% 28% 34%
Direct Debit 10% 18% 68%
Digital wallet 65% 18% 10%

Instalments

e.g. car loan

Payment method Unlikely to use Neutral feeling Likely to use
Credit card 52% 20% 20%
Debit card 35% 28% 29%
Direct Debit 18% 23% 52%
Digital wallet 63% 19% 10%

Traditional subscriptions

e.g. gym membership or newspaper subscription

Payment method Unlikely to use Neutral feeling Likely to use
Credit card 50% 24% 19%
Debit card 30% 30% 33%
Direct Debit 21% 25% 48%
Digital wallet 60% 21% 12%

Key takeaways

  • The payment experience you offer your customers is a key part of your overall customer experience - don’t ignore it

  • Payment preference is very divisive - even payment methods which are most preferred still see a significant percentage of businesses unlikely to use them at all

  • No single payment method covers enough market preference to warrant ignoring the potential need for a multi-method payment strategy

Learn more about payment preferences and the impact on your business

Whether you’re looking to optimise conversion and reduce churn in your local market, or are expanding into international markets and want to know which payment methods reign supreme - check out our reports on the state of payment preferences today:

[Report] Global payment preferences for recurring B2B purchases

We surveyed 4,990 businesses across 9 markets to determine which payment methods businesses prefer for different use cases.

Download the report

[Report] Consumer payment preferences for recurring purchases: 2019

12,785 consumers across 10 different markets share their payment preferences in 2019.

Download the report

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