News & Views - Savantor
You are here:

Credit v Debit

Friday, 30 September 2011

It has been the case for some time in the UK that debit cards have become the card of choice for many consumers presumably down to a need to retain greater control over spending in these stringent times. Two recent reports from the UK Cards Association and researchandmarkets have confirmed this trend and looked at some of the issues behind it. In the UK, there are more credit cards in circulation than in other European countries, although their popularity has declined over the last few years. According to the UK Cards Association, 61% of UK consumers hold a credit card. This high level of card holding is partly due to the ease of obtaining cards in comparison with other European countries and the lack of regulation in terms of interest rates, allowing card issuers to price according to a risk assessment.

The UK Cards Association points out that the 2000s was a decade of two halves. Whilst the first half saw strong growth across all forms of plastic, from 2005 there was a sharp change in consumers’ appetite for credit cards, long before the recession. During the first half 22.8 million new credit cards were issued rising to a total of 70 million in 2005 but by the end of the decade the number of credit cards had fallen to 55.6 million and outstanding balances were £10 billion lower. Consumers’ spending on debit cards almost doubled from 2005 to 2010, fuelled by a migration from cash and increasing use of debit cards for smaller value transactions.

The mid-point of the decade saw an increasing preference for debit cards, tighter lending practices and consumers adopting a more cautious attitude to borrowing. From 2005 onwards, two million more adults decided not to use their card for borrowing, paying off their balance in full each month instead. This trend has continued – last year, 62% of cardholders paid in full each month, compared to 55% in 2005, with the over-45 age group accounting for much of the change.

Over the decade, an extra 35 million debit cards were issued, bringing the number in circulation to 84 million by 2010. Those cards were used three times more often than credit cards last year (6.5 billion compared to two billion) to spend a total of £299 billion – almost four times more than was spent on debit in 2000 (£77 billion). It seems like the marketing departments of credit issuers are going to face a challenging few months (or maybe years) to tempt consumers back to the fold.

Savantor Services

Savantor Services

Savantor services are tailored to Client needs based on our core service areas

Specialist Resourcing Payments Strategy Platform Transition Operational Efficiency
Savantor Services

Job Opportunities

Consulting and contracting roles in the payments, mobile and banking arena within the UK and across Europe

View more
Savantor Services

Savantor Views

Find out more from our Savantor brochures, MarketEye back copies and Industry opinion

Collateral Market Eye News & Views Sign Up to receive MarketEye

Client Quotes

Card Processing Migration

"Disciplined methodology and effective teamwork, guided by Savantor's migration expertise and operational knowledge, were the hallmarks that led to the resounding success of this project, enabling us to maintain and develop our business capability."

Robert Lambert, Head of Cards Strategy - Permanent tsb bank - Ireland

Expert Witness

"After searching extensively for the required industry expert in a complex litigation, Savantor was identified to have the necessary industry knowledge and expertise on a range of complex issues. Savantor provided clear advice and was able to quickly hone in on the key issues, but most importantly, generating pragmatic winnable answers."

Gavin Ingram, General Counsel & VP Strategic Planning - Global Blue - Asia Pacific

Credit Risk Review for New Product Launch

"We needed expert help at short notice and Savantor were very impressive in their response and knowledge. The results were very clear and useful, enabling us to quickly make good progress on the next steps."

Sami Karhunen, Head of Business Intelligence and SME Sales - Point Transaction Systems Oy - Finland

Acquiring market insight and strategy review

"Savantor brought an independent perspective and valuable insight that enabled Rabobank to ratify options for delivery and future growth and make informed business decisions in support of our target business model. Having used Savantor on a number of strategic projects, we have no hesitation in recommending their services to others."

Evert R Fekkes, SVP Payment & Savings Services - Rabobank - Nederland

Payments Platform Strategy and Sourcing

"We were in urgent need of external independent expertise to supplement our internal resources. Senior consultants had to quickly integrate with our team and actively contribute. Their experts quickly forged strong working relationships and delivered to our brief. We enjoyed working with them to develop our future platform strategy."

Evert R Fekkes, SVP - Payment & Savings Services - Rabobank Nederland

Moneris Solutions

"Savantor did an outstanding job of the review and I received nothing but positive feedback on the interaction with our management team."

Jeff Guthri, COO - Moneris Solutions - Canada

Payments Workshop Material

"Savantor helped ACI build a payments onboarding workshop for new technical staff in ACI EMEA. Their extensive experience took our outline and built a great starting presentation of industry facts that we have now customised further into a half day session that is used for all new joiners. Our Americas and APAC regions have also taken the material and customised it for their regions. A great job by Savantor has meant new joiners to ACI hit the ground running."

Richard Sanders, Principal Solution Consultant - ACI - Worldwide EMEA

Acquirer Strategy and Operating Model

"Savantor brought an effective blend of European acquirer market expertise and transaction processing solution design. Their experts quickly forged strong working relationships with our team. We enjoyed working with them to create our future acquirer strategy."

Mikko Hyttinen, SVP - Lending Services - OP-Pohjola Group - Finland

Clients - Request Support

Send us a support request and one of our specialists will be in contact to assist you.

Consultants – Upload your CV

Register your CV with us and gain access to a range of job opportunities through our online job search portal.