News & Views - Savantor

Changing ways we pay

Thursday, 28 February 2013

Two recent pieces of research have investigated the way payment habits are changing. The UK Payments Council report The Way we Pay showed that in 2001, 43% of retail spending by value was made using notes and coins. This fell to 30% in 2011 as people switched to plastic, with a fourfold increase in spending on debit cards over the ten years. By 2021, consumer spending is forecast to be roughly 45% higher than in 2011, but the use of cash is expected to have fallen 1% and with payments moving to mobile phones, card usage could be on the decline by then too, suggests the report.

This trend could be increased if an ACG survey of young consumers in the UK is to be believed. According to this research 44% of respondents under 35 said they had no interest in using credit cards as their main method of payment. Instead, many in the under-35 crowd favour debit cards and cash, with 49% listing debit as their primary payment method and 27% listing cash. Compare that with the 20% in this age group who said that credit cards were their primary form of payment.

The researchers concluded that the recession and tightening of lending standards has left young people unable to obtain credit, or at least unable to obtain cards with good terms. So, they are opting for financial tools that are within their reach. Plus, those who came of age during the economic downturn have been trained to worry about debt, but not to value the advantages of credit.

Although the banking industry is trying to get rid of cash it has become increasingly easier to access, with the number of ATMs in the country doubling over the decade to more than 64,000. In 2000, three fifths of cash came from ATMs but by 2011, 71% of cash withdrawn was via ATMs and this proportion is projected to grow to 78% in 2021. On average, people each took £4501 of cash from their accounts in 2011, but that is forecast to drop to £4,178 by 2021 due to the adoption of new payment technologies.

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