xpate case study The state of e-commerce market in the UK

The e-commerce market in the UK is one of the largest and fastest growing across the EU with an approximate worth of £159 billion, representing 33.4% European e-commerce. Such growth is additionally fueled by mobile commerce that has grown by 20% over the last three years and is expected to reach a volume of £169 billion as a standalone market by 2021.

According to 2019 Global Payments Trends Report — United Kingdom Country Insights by J.P.Morgan the main consumer trend in the UK e-commerce market includes the widespread use of card payments, which account for 53% of all transactions.

Such behavior is easily explained by the fact that 96.4% of the UK population have a bank account. In addition, 25% of payments are made using digital wallets and services like PayPal that offer high levels of convenience and security.

Merchants in the UK are also taking note of the Open Banking initiative, which is a UK-exclusive extension of wider European revised Payment Services Directive (PSD2) which forces major banks to share their current account data in a standardized, secure format with authorized online organizations. The introduction of Strong Customer Authentication could spur merchants to offer more recurring payments, as two-step authentication is only required for the first payment and not for every transaction.

General UK e-commerce consumer behaviour

A recent overview of the state of the UK e-commerce market by J.P.Morgan (2019) has revealed a number of important statistical indicators that form conclusions regarding potential market trends for the coming years.

British consumers are moving abroad in their behavior with 32% making online purchases from China, the US and Germany - the three primary cross-border markets.

The demographics are also changing with older generations increasingly expressing interest in online shopping. Given the aging population, it is becoming apparent that over half of households shopping in the UK will soon account for a larger fraction of the e-commerce market’s growth.

At the same time, the data shows that 19% of shoppers abandoning shopping cart stated that they did so as a result of not trusting the site with their card information, while another 8% stated that they did not find suitable payment options.

Statistics by Baymard Institute (2020) indicate that 70 out of every 100 shoppers adding items to their cards eventually leave the website without making a purchase. 8–19% abandon the cart, because they are not satisfied with the current online payment methods offered by the website.

Digital Commerce Market Statistics

As indicated by Statista (2020), the digital commerce market is growing as the statistics demonstrate heightened interest from the UK consumers.

The market is projected to reach £92,087 million in 2020, making it the 4th highest value worldwide with transaction value expected to show an annual growth rate of 7.0% resulting in a projected total amount of £120,805m by 2024.

Given that 60% of the population shop online in the UK, more than 20 percent of all retail industry sales in the United Kingdom were made online. The clothing and sports goods are having the highest expenditure rate.

UK Mobile Payments Market

The UK mobile offline payments market is also demonstrating stable growth. The main drivers of growth are Generation Z users with Millennials close behind them.

According to the UK Finance (2019) mobile payments are rising in the UK thanks to the quick-service restaurants (11.3%), coffee shops (11%), public transport (11%) and bars and pubs (9.25%).

As highlighted by Merchant Savvy (2020) London is leading the way as the biggest adopter of mobile payments, accounting for 7% of all transactions under £30 and 5.7% of all transactions — at least 2% higher than any other region. Trailing London is the East of England, where mobile payments account for 3.3%. Next is the South East of the UK at 3.2%, and Yorkshire taking fourth place in the statistical rating at 2.9%.

Cash Payments

The role of cash in the UK has also been changing as stressed by UK Finance (2019). Previous statistics from 2018 showed that 5.4 million consumers had almost never used cash, instead relying on cards and other payment methods to manage their spending. The statistics showed that this was an increase of 3.4 million consumers from the previous year. Such consumer behavior clearly demonstrates that UK buyers are moving towards cashless payments.

The number of cash payments in the UK is expected to continue to fall over the coming decade, as consumers continue to turn to alternative payment methods, most notably debit cards.

By 2028 cash payments are expected to be at 3.8 billion , accounting for 9% of all payments. Rather than the UK becoming a cash-free society over the next decade, it is transforming to an economy where cash is less important than it once was but remains a payment method that continues to be valued and preferred by many.

Cashless Payments

The popularity of cashless payment methods has continued to increase in 2020. BRC statistics by from 2018 showed that there were 7.4bn contactless payments in the UK, up 31% from the previous year.

By the end of 2018, there were almost 124m contactless cards in circulation in the UK, with 84% of all debit cards offering such functionality. Statistics provided by Square (2019) show that 17% of British shoppers are “card only” and do not use cash to pay for their shopping on an average day. In addition, 38% are “card first” shoppers who typically prefer to pay by card. The research also showed that 27% of those surveyed stated that they had not bought from a small business, because they could not pay by card, while another 60% said that they would buy more from local businesses if they were offered card payment methods.

The number of people in the UK who are living “an almost cashless life” has more than doubled in two years, to 7.4 million, official data by UK Finance (2019) shows.

Fewer than one in four payments in 2019 were made with cash and more than half were made by card. Almost one out of seven of the population, and one out of four of those aged 16 to 34, chose to live a largely cashless life in 2019. A cashless lifestyle is defined as either not using notes and coins at all, or only once a month.


The trends show that the UK is moving towards cashless payments with e-commerce and digital commerce being the main drivers spurring such a transition. The convenience and broad availability of cashless payment solutions is acting in favor of such a trend, allowing an increasing number of people from various generations to opt for online payments.


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