UK Finance: Are Mobile Wallets Redefining Retail?

The way people in the UK pay is changing and it's not just about what’s in their wallet anymore – it’s about the phone in their hand. 

According to UK Finance’s Payment Markets Report for 2024, more than half of UK adults (57%) now use mobile wallets like Apple Pay and Google Pay, a sharp rise from 42% the year before. This growth could reshape retail operations, ecommerce strategy and supply chains.

As consumers increasingly rely on mobile devices to shop, pay and manage money, retail ecosystems are being pushed to respond in real time, from warehouse layouts to delivery models. 

“2024 was a year of firsts, all pointing to the growing shift towards digital payments,” says Adrian Buckle, Head of Research at UK Finance. 

“More than half of UK adults used mobile wallets, mobile banking overtook desktop as the main way people access their accounts and cash fell below 10% of all payments.”

Removing checkout friction

Retailers now face a new challenge: matching the pace of mobile-driven commerce with equally fast fulfilment.

The sharp increase in mobile wallet use leads to faster transactions in-store, allowing for higher customer throughput. As more purchases take place in quick bursts – especially through contactless payment – supply chains must pivot to support these “micro-purchases” both in shops and online.

The report shows that card payments still dominate, making up 64% of all UK transactions, but with mobile taking a growing share of that pie.

Of the 26.1 billion debit card payments made last year, 18.9 billion were contactless – driven in large part by mobile usage.

Retailers and their supply partners are also dealing with a more complex reverse logistics environment.

As Buy Now Pay Later (BNPL) options like Klarna become more popular – now used by 25% of UK adults, up from 14% – return volumes are rising. Perhaps unsurprisingly, fashion leads BNPL use, making up 46% of these transactions, with an average spend of US$114.

With returns more common in this category, supply chains must be able to handle a higher rate of product reflows.

The shift also increases the importance of last-mile delivery. More people are shopping through mobile apps and expecting flexible fulfilment.

The pressure is on retailers to optimise last-mile logistics, including same-day or time-slot deliveries, while balancing the cost and complexity of managing fluctuating demand.

Retailers must compete on payment experience

The competition is now also about who supports the right payment methods. Mobile wallets and BNPL are becoming the expected standard for consumers, meaning those without them could get left behind.

Consumers who use these services expect them to be available wherever they shop. Retailers not offering Apple Pay, Google Pay or popular BNPL providers risk being left out.

There’s also a shift towards ecosystem loyalty. When mobile wallets are integrated with retail apps, they lock users in. Consumers who sign up for a mobile wallet tend to become frequent users. The report notes that of those using mobile payments, 44% use them weekly or more.

This has implications beyond checkout. Omnichannel strategies must be recalibrated.

With mobile payments erasing the gap between online and in-store, retailers need unified systems across payments, loyalty and inventory. 

Regulatory changes will soon shape this space further. New rules due in 2026 require affordability checks for BNPL, which could reduce impulse buying and shift revenue patterns, especially in discretionary retail.

At the same time, faster payments are on the rise, enabling quicker settlement cycles. This affects cash flow planning, especially for supply chain finance.

Consumer demand shifts

Crucially, older shoppers are joining the mobile wallet trend. Among adults aged 65 and over, registration jumped from 14% in 2023 to 25% in 2024.

With adoption growing across all demographics, supply chains need to be more inclusive – offering delivery options that suit less digitally native users, including assisted services or scheduled delivery windows.

Cash is now firmly in decline. Just 4.4 billion cash payments took place in 2024, down from six billion in 2023. It’s the first time cash has made up less than 10% of all transactions.

About 1.2 million adults still rely on cash for day-to-day spending, but this group is shrinking. Retailers serving cash-dependent customers, such as small shops or parts of the transport sector, will need to reassess their operating models as digital takes over.

Looking ahead, UK Finance expects card payments to rise to 67% of all transactions by 2034, with contactless making up 43%. Mobile wallet use is set to increase, particularly among older age groups.

Emerging tools like Pay by Bank, which uses open banking to allow direct account payments, could further reshape retail if widely adopted.

Retail and supply chain strategies that fail to prioritise mobile, frictionless and flexible payment options risk falling behind in a world that is no longer tapping a card, but a screen.