News & Views - Savantor

The continuing importance of payment cards

Thursday, 09 October 2014
The UK Cards Association has just released its card expenditure statistics for August 2014. For the first time ever, the number of debit and credit card transactions made in a single month passed one billion in August. This means that there are now over 375 card transactions made every second in the UK. The new figures confirm a growing trend for consumers to choose cards over cash for purchases. Factors driving this growth include the growing use and acceptance of contactless for low value payments; other factors are likely to be the continuing improvement in the economy as well as a positive growth in consumer confidence. Debit cards are increasingly the preferred method, with the growth in both the number and value of transactions increasing at a faster rate for debit than for credit cards. This preference is again being bolstered by the growing use of contactless for low value payments. Average transaction values for both debit and credit cards are, however, showing a persistent decrease over the last three years, also probably due to the continuing migration of low value cash payments to cards along with the increasing use of contactless cards. It is also likely online spending is boosting the number of smaller value transactions, particularly via smart phones and tablet devices. Yet the annual growth rate of the number of purchases continues to exceed that of the value of purchases since April 2011, again highlighting a growing consumer preference of more frequent use of cards for lower value payments. Whilst these figures indicate the continuing importance of cards to consumers, it is worth considering the impact that alternative payment initiatives are likely to have upon future trends. Consumers are becoming more and more familiar with using their mobile devices for payment purposes - applications such as Pingit and Paym, although P2P, help foster this familiarisation. It has recently been announced that Zapp, a subsidiary of VocaLink, is to partner with major retailers to offer a secure and simple way for their customers to pay for goods using just their mobile device and their existing bank account. This month also sees the launch of Apple Pay in the US, which if successful will no doubt be implemented in the UK. So whilst payment cards unquestionably represent a key means of payment in the UK today and are certainly winning the war against cash, it will be interesting to review their usage in the light of new payment innovations being introduced.
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