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The use of credit and debit cards continues to grow in the developed world as many people turn away from cash. This is particularly true in the UK, where new figures have recently highlighted just how reliant the nation’s consumers are on plastic when it comes to making payments.

New figures from the UK Cards Association reveal that debit transactions have become the backbone of the country’s consumer economy, reflecting key changes in the way consumers access their money.

More cards, more transactions

The headline figure from the report was that the UK has now surpassed the milestone of 100 million cards in circulation. This occurred in April and means there are now around 1.5 debit cards for every individual in the country.

This marks an increase of 2.7 per cent in the last 12 months, with the number of cards doubling since February 2001, when the 50 million milestone was reached.

More than £53 billion was spent on payment cards in April this year. Some £37.8 million of this was on debit cards, compared to £15.1 million on credit cards. This means more than half (53.5 per cent) of retail sales – including fuel – in the UK that month were completed using debit.

Across all payment cards, the average transaction value stood at £44.36 in April, an increase of just 1p on the previous month. However, this remains well below the level of £47.20 recorded a year ago, which suggests more people are turning to plastic for lower-value transactions that they may have relied on cash for in the past.

A new payments environment     

There are several reasons behind the continued rise of debit cards in the UK. For instance, online shopping is still a growing area, with the volume of internet transactions increasing at double the rate of total card purchases (22 per cent compared with 11 per cent). Overall, £12.6 billion was spent online in the UK in April, a 14 per cent rise year-on-year.

The fact that debit cards are now routinely issued as standard when consumers open a new bank account has also contributed to the rise in the number of cards in circulation. The UK Cards Association noted that the number of ATM-only cards has been falling substantially in recent years, while cheque guarantee-only cards ended with the closure of the scheme in 2011.

New technology such as contactless payments has also encouraged the use of debit cards in the UK. The number of such transactions rose to 188 million in April, accounting for 16 per cent of total card purchases, up from just six per cent twelve months ago.

With the average transaction value for contactless payments now standing at £8.42, up by £1.50 since April 2015, and the maximum limit for these transactions having increased from £20 to £30 last year, there’s clearly an appetite among UK consumers for this fast, convenient method of payment.

Andy Brown, Marketing Director Payments at NCR Corporation, has nearly 30 years’ experience in e-payment systems both from the delivery and support of systems in the Far East and Europe and in the product management and marketing perspectives. Based in the UK, Andy is responsible for the marketing for NCR’s payments solutions.

 

Image credit: iStockphoto/bernie_moto

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James W. Gabberty

Gabberty is a professor of information systems at Pace University in New York City. An alumnus of the Massachusetts Institute of Technology and New York University Polytechnic Institute, he has served as an expert witness in telecommunication and information security at the federal and state levels and holds numerous certifications from SANS & ISACA.

Zachary Ehrlich

25-year-old writer, and as a native San Franciscan, I am unreasonably loyal to Bank of America, if only for their superhero-like origin story, involving the 1906 earthquake and Italian fruit vendors.

Brad Strothkamp

http://www.forrester.com/rb/analyst/brad_strothkamp

Marisa Mann

Marisa Mann brings over 15 years of experience in consulting and financial services industries to the Solstice team, working on large scale enterprise initiatives across many technologies, including specializing in the digital space – Internet and mobile. Mann is passionate about mobile and the endless possibilities for the enterprise, delivering business value through strong brand recognition and driving to excellence in the consumer experience. Prior to Solstice, Mann worked at JP Morgan Chase, Diamond Management and Technology Consultants, Washington Mutual, Inc, and Accenture.