News & Views - Savantor

A decade in payments

Wednesday, 09 December 2015
The UK Cards Association has just issued a report showing the evolution of spending patterns in the UK over the last decade to 2014. The report shows how significantly the profile of spending over the past decade has changed with use of payment cards becoming much more prevalent than cash as the payment method of choice: in 2014, £566 billion was spent using cards, more than double the 2005 figure of £270 billion. Each month, increases can be seen in both the number of card transactions and the total value of transactions. Cash spending was overtaken by card spending in 2004; these days it is quite normal to use a card to pay for incidental spending such as a coffee or lunchtime sandwich – a trend facilitated by the rise in contactless cards and contactless-accepting retailers. The use of cards as a means of paying for transport has also been an area where the use of cards has become much more prevalent, again assisted by the use of contactless technology. Possibly the most important innovation during the past decade has been the introduction of Chip and PIN, providing greater security and fraud protection and enabling increased acceptance at establishments such as pubs, hairdressers and dentists and other similar retailers. Aside from the statistical data, it is interesting to see how payment patterns have been influenced not only by the available technology – which is in itself partially driven by consumer requirements – but also outside influences such as the state of the economy and consumer disposable income. In 2008 and 2009 there was the credit crunch and subsequent recession. During this period the number of credit cards in circulation decreased by over 9 million to 31.2 million; conversely the number of debit cards grew by over 7 million to 44.9 million. In particular consumer spending habits seemed to change as the UK began to emerge from the recession – people preferred to spend less but shop more often at discount and local stores as opposed to big out-of-town superstores. As a result of customer demand, more shops began to accept cards and this became the preferred method of paying for ad-hoc and minor essential purchases. One of the key areas where there has been a huge growth in usage is online, which now accounts for over 20% of spending. Consumer demand has led to it being possible to pay for an ever-increasing range of goods and services online, which has in turn impacted the retail market in terms of fulfilling this demand (see Savantor's View in the last edition of MarketEye.) So how will the next ten years evolve in terms of payment cards? It seems likely that contactless andonline will play a significant role – but it will be very interesting to look back over the next decade when the time comes and be able to see both the trends which actually evolve and the key players in the market in comparison to any current expectations we may hold.
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