Paying it forward: How is charitable spending evolving among the UK public? - Paying it forward: How is charitable spending evolving among the UK public?

Paying it forward:
How is charitable spending evolving among the UK public?

With rising living costs and intensifying competition, charities are having to think even more strategically about how to encourage support.Contents

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Paying it forward: How is charitable spending evolving among the UK public?

Contents

Paying it forward: How is charitable spending evolving among the UK public?

Bacs: Still a UK favourite

Contactless: Convenience reigns

Cash: Down, but far from out

Cheques: A chapter in the history books

Open Banking and Variable Recurring Payments: The next frontier for charity donations

_{Paying it forward}_|_Bacs_|_Contactless_|_Cash_|_Cheques_|_{Open Banking & Variable Recurring Payments}_|_{Balancing act}_|_{Meet the team}

Paying it forward: How is charitable spending evolving among the UK public?

Philanthropy is embedded in the social fabric of the UK. But while charity plays an important role in the lives of many people across the country, the financial pressures of recent years mean that encouraging donations is becoming more challenging.

Those who are giving, are giving more. According to data from the Charities Aid Foundation, the average donation value is rising, from £46 in 2019¹to £65 in 2025², although that figure has decreased from £72 in 2024³. The British public donated more than £14 billion to charitable causes in 2025². Despite average donations being higher than in 2019, the number of donors and sponsors are at the lowest levels ever recorded. Compared to 10 years ago, there are six million fewer donors, and 49% of those who didn’t donate in 2025 cited not being able to afford it as the main reason why². A shrinking pool of donors combined with a rising demand for services is resulting in increased competition in the charity sector, and the need for charities to think even more strategically when planning how to encourage donations.

The average donation value of the British public

¹^{uk_giving_2023.pdf}^{| 2}^{uk_giving_report2026.pdf}^| 3^{uk_giving_report_2025.pdf}

Source: Charities Aid Foundation UK Giving Reports

_{Paying it forward}_|_Bacs_|_Contactless_|_Cash_|_Cheques_|_{Open Banking & Variable Recurring Payments}_|_{Balancing act}_|_{Meet the team}

While the change in behaviour is underpinned by a range of economic and social factors, one action that charities can take is to make it easier and more convenient for people to donate. This means aligning with how people already pay and give in their everyday lives – such as using digital wallets, contactless payments, or online platforms. By understanding supporters’ preferred channels, adopting widely used payment methods, and tracking how these behaviours are evolving, charities can remove friction and make it as easy as possible for both existing and potential donors to contribute.

Charities are having to think even more strategically about how to encourage support.”

Kate Manku, Managing Director, Head of Higher Education
and Charities, Lloyds Corporate & Institutional

_{Paying it forward}_|_Bacs_|_Contactless_|_Cash_|_Cheques_|_{Open Banking & Variable Recurring Payments}_|_{Balancing act}_|_{Meet the team}

Bacs: Still a UK favourite

Bacs is still the most popular method of making charity donations, with around a fifth (£2.89 billion)² of all donations made using direct debits or standing orders in 2025, up from £2.68 billion in 2024³. More widely, data from Pay.UK and UK Finance reveals that Bacs usage is increasing, albeit at a slower pace than other payment methods. In December 2025 alone, direct debit payment volumes reached 446 million – up from 422 million in December 2024⁴.The payment method is forecast to see moderate growth over the next decade and reach 5.1 billion payments in 2034⁵.

Although their cost per acquisition can be high, often with a reliance on face-to-face fundraising, direct debits are one of the most cost-effective payment methods. They offer predictable, recurring donations with a higher donor retention rate due to their ‘set and forget’ status. They’re also cheaper to process than card payments – and the fact that more of the donation will go to the charitable cause rather than to paying card processing fees is an attractive proposition to donors.

²^{uk_giving_report2026.pdf}^{| 3}^{uk_giving_report_2025.pdf}^{| 4}^{Monthly-Statistics-December-2025.pdf}^{| 5}^{Payment Markets Report Summary.pdf}

_{Paying it forward}_|_Bacs_|_Contactless_|_Cash_|_Cheques_|_{Open Banking & Variable Recurring Payments}_|_{Balancing act}_|_{Meet the team}

Contactless: Convenience reigns

Smartphones, watches and contactless cards – the past decade has seen consumers rapidly adopt contactless payments technologies fuelled, in part, by the convenience they offer and their widespread adoption by retailers and organisations in other consumer-facing sectors.

Contactless debit and credit card payment volumes are increasing exponentially. In 2018, the UK public made 7.4 billion payments using contactless cards, which accounted for 19% of all payments made in the country⁶. In 2024 that figure rose to 18.9 billion (39%) and by 2034 it’s expected to reach 24 billion (43%)⁵. While younger generations have quickly adopted the payment method, contactless forms of payment are used across demographics and half of all adults in the UK are making mobile contactless payments regularly⁵. At Lloyds, we’re seeing an increasing adoption of contactless by older consumers. Post-pandemic, contactless adoption among over-65s rose significantly and while not all are confident, familiarity has grown⁷.

⁵^{Payment Markets Report Summary.pdf} ^{| 6}^{UK-Finance-UK-Payment-Markets-Report-2019-SUMMARY.pdf}^{| 7 Lloyds' data}

_{Paying it forward}_|_Bacs_|_Contactless_|_Cash_|_Cheques_|_{Open Banking & Variable Recurring Payments}_|_{Balancing act}_|_{Meet the team}

In the charity sector, we’re seeing a significant shift towards the use of contactless fundraising terminals. Many of our charity clients have rolled out contactless devices at scale, significantly reducing handling costs and the security risks associated with cash. However, the options open to charities looking to embrace the benefits of contactless extend beyond contactless card payments. QR codes and one-click online donations are seeing uptake from previously disengaged groups when the process is simple and low-risk. These technologies are underpinned by the rapid adoption of mobile wallets, with over half (57%) of adults using them⁸.

The rising trust in frictionless digital options mirrors the trends we’re seeing more widely in terms of digital familiarity. 77% of our customers used digital banking – either via our app or via browser – in the final quarter of 2025. 54% of our customers exclusively use digital channels, while just 5% exclusively use branches⁷.

^{7 Lloyds’ data | 8}^{www.ukfinance.org.uk/news-and-insight/press-release/over-half-uk-adults-now-use-mobile-wallets}

_{Paying it forward}_|_Bacs_|_Contactless_|_Cash_|_Cheques_|_{Open Banking & Variable Recurring Payments}_|_{Balancing act}_|_{Meet the team}

Cash: Down, but far from out

In the post-pandemic era, there has been a common perception that our transition to a cashless society is well underway. But this isn’t entirely true; while the usage of cash has declined – in 2024 it accounted for less than 10% (4.4 billion) of all payments for the first time⁵ – and consumers are increasingly embracing contactless technologies, it remains an important and popular payment method.

In terms of usage in the charity sector, while one in three donors made gifts in cash in 2025², there is a general decline. Cash accounted for 36% of charity donations in 2024³, compared to 53% of donations 5 years earlier in 2019⁹ and 55% in 2014¹⁰. Traditional collection box donations have also dropped, with the public donating £556 million² in charity buckets in 2025, down from £577 million in 2024³. Supporters often express willingness, but since fewer people are carrying cash they lack the means to immediately donate.

²^{uk_giving_report2026.pdf}^{| 3}^{uk_giving_report_2025.pdf}^{| 5}^{Payment Markets Report Summary.pdf}^{| 9}^{caf-uk-giving-2019-report-an-overview-of-charitable-giving-in-the-uk.pdf}^{| 10}^{caf-ukgiving2014.pdf}

_{Paying it forward}_|_Bacs_|_Contactless_|_Cash_|_Cheques_|_{Open Banking & Variable Recurring Payments}_|_{Balancing act}_|_{Meet the team}

But cash is not going anywhere soon, and it won’t disappear completely. The Treasury Committee’s 2025 inquiry Acceptance of Cash concluded that cash “continues to play an integral role in the UK’s payments ecosystem”¹¹ and highlighted the importance of the UK public’s access to cash¹². This is especially the case for financially vulnerable or digitally excluded communities, since people with limited digital access, low incomes or cognitive conditions still prefer cash due to budgeting control, trust, and tangibility.

For charities, continuing to support cash as a payment method ensures inclusivity, signalling that the charity is accessible to all donors, and can still provide benefits in street- or event-based fundraising where impulse donations may otherwise be lost.

¹¹^{www.publications.parliament.uk/pa/cm5901/cmselect/cmtreasy/1128/report}^{| 12}^{www.publications.parliament.uk/pa/cm5901/cmselect/cmtreasy/324/report}

_{Paying it forward}_|_Bacs_|_Contactless_|_Cash_|_Cheques_|_{Open Banking & Variable Recurring Payments}_|_{Balancing act}_|_{Meet the team}

Cheques: A chapter in the history books

Cheques, on the other hand, are becoming obsolete. Cheque volumes declined by 17% in 2024 and now account for 0.2% of all payments. It’s estimated that this will be further reduced to 0.1% by 2034⁵.They are today one of the most expensive payment methods due to rising in-house processing costs, compliance burdens, manual effort, and the inability to justify investment in automation in a declining market.

Charities are generally still accepting cheques – it’s estimated that 2% of donations were made by cheque in 2024³ – however their acceptance is becoming harder to justify. Some charities are accepting them, along with other analogue options, to support donors during the wider digital transition. They are continuing to accept cash, cheques, and telephone donations alongside newer digital channels to ensure that they don’t exclude any supporters during the digital transition.

³^{uk_giving_report_2025.pdf} ^{| 5}^{Payment Markets Report Summary.pdf}

_{Paying it forward}_|_Bacs_|_Contactless_|_Cash_|_Cheques_|_{Open Banking & Variable Recurring Payments}_|_{Balancing act}_|_{Meet the team}

Open Banking and Variable Recurring Payments:
The next frontier for charity donations

The implementation of Open Banking in 2018 has opened the door to a wave of new, innovative and game-changing payment technologies, ranging from near-instant Faster Payments to Application Programming Interface (API)-powered payment methods.

Open Banking-derived payment methods are gaining popularity quickly. In 2025, Open Banking-enabled payments reached 351 million – a 57% increase compared to 2024. They are also acknowledged as a reliable way to pay, with the weighted availability – a measure of uptime – remaining above 99.5% across 2025.¹³

Open Banking could have a transformative impact on charity donations, in particular the introduction and widespread adoption of API-enabled Variable Recurring Payments (VRPs). VRPs have the potential to be more controlled and transparent versions of direct debits. Unlike direct debits, VRPs allow donors to authorise charities to automatically collect a flexible, variable amount from their bank account, rather than a fixed amount each time.

Open Banking technology has been a catalyst for a new generation of payments.”

Brian Owens,
Director, Transaction
Banking Solutions,
Lloyds Corporate
& Institutional

^{13 www.openbanking.org.uk/insights/open-banking-in-2025-now-part-of-the-uks-everyday-financial-life/}

_{Paying it forward}_|_Bacs_|_Contactless_|_Cash_|_Cheques_|_{Open Banking & Variable Recurring Payments}_|_{Balancing act}_|_{Meet the team}

While largely still in development, the initial use of VRPs has offered a promising indication of future widespread adoption. In 2025, sweeping VRP volumes nearly doubled, representing a +98% year-on-year increase¹³.

For charities, Open Banking could have multiple benefits, including fewer payment failures, quicker settlement due to their use of the Faster Payments service, and greater donor trust thanks to their increased transparency and control. They could also result in fewer cancellations (2.8 million people cancelled a regular payment to a charity in 2025²) since they offer donors the opportunity to donate when they can afford it, rather than a set amount each month.
Finally, Open Banking-derived payment methods allow near-zero transaction fees, which – like direct debits – give donors the reassurance that the charity can keep most of their donation.

“Open Banking technology has been a catalyst for a new generation of payments,” said Brian Owens, Director, Transaction Banking Solutions at Lloyds. “Ongoing developments like Variable Recurring Payments could be game-changing – combining flexibility with transparency, speed and near-zero fees – ensuring that more of every pound goes straight to the cause.”

²^{uk_giving_report2026.pdf}^{| 13 www.openbanking.org.uk/insights/open-banking-in-2025-now-part-of-the-uks-everyday-financial-life/}

_{Paying it forward}_|_Bacs_|_Contactless_|_Cash_|_Cheques_|_{Open Banking & Variable Recurring Payments}_|_{Balancing act}_|_{Meet the team}

Balancing act

For many UK charities, managing donation payments requires balancing cost, evolving consumer behaviour, new technologies and the needs of more vulnerable donors. While innovations bring faster settlement, lower fees and greater convenience, ensuring financial inclusion remains essential.

At Lloyds, we’re seeing a shift from cost-led to risk-based decisions. Charities are assessing payment changes through the lens of consumer vulnerability, not just efficiency. ‘Assisted digital’ support is also growing, with staff and volunteers helping donors use digital channels, from setting up recurring donations to using contactless at events. Some organisations are offering digital literacy workshops or simple guides to support this transition.

The Lloyds Bank Academy, for example, is a free learning platform helping individuals and small businesses build digital and financial skills. Through accessible courses, live sessions and practical resources, it aims to improve confidence and inclusion across communities. Charities are also focusing on user-centred payment journeys, designing digital experiences with accessibility in mind – such as larger fonts, simpler processes and clearer interfaces – enabling more donors to engage comfortably. “As traditional payment methods give way to faster, more flexible digital options, the UK payments landscape is changing rapidly,” said Sarah Tickner, Relationship Director at Lloyds. “But the real priority is balance, inclusion and reassurance.”

Charities must embrace innovation without leaving any donor behind.”

Sarah Tickner,
Relationship Director,
Charities, Lloyds
Corporate & Institutional

_{Paying it forward}_|_Bacs_|_Contactless_|_Cash_|_Cheques_|_{Open Banking & Variable Recurring Payments}_|_{Balancing act}_|_{Meet the team}

Meet the team
supporting UK
charities

Kate Manku

Managing Director,
Head of Higher Education
and Charities

Sarah Tickner

Relationship Director -
Charities

Brian Owens

Cash Management
Sales Director

Lee Andrews

Transaction Banking
Solutions Director

Brenda Henderson

Associate Director

Rachel Martin

Associate Director

For more information on how Lloyds can support your charity’s payment journey, speak to your Relationship Manager or visit our online hub.

_{Paying it forward}_|_Bacs_|_Contactless_|_Cash_|_Cheques_|_{Open Banking & Variable Recurring Payments}_|_{Balancing act}_|_{Meet the team}

Share your thoughts

What’s your biggest challenge with donation payments right now?

Keeping pace with changing donor preferences and behaviours
Managing costs/fees (and protecting net income from each donation)
Financial inclusion (supporting supporters who rely on cash/cheques)
Operational burden (handling, reconciliation, multiple providers, payment rejections)
Capturing Gift Aid, without adding friction for donors
Governance/risk concerns when introducing new payment methods