How we pay in the UK: debit card number hits 100 million for the first time

black and white mastercard held in hand

We may be celebrating the credit card’s 50th anniversary in June, but in April, the debit card hit a milestone of its own. In April, the number of debit cards in the UK passed the 100 million milestone, marking an increase of 2.7% from 2015, according to The UK Cards Association.

With the 50 million mark being reached all the way back in February 2001, between April 2015 and 2016 the number of cards increased from 97.6 million to 100.3 million.

In terms of spending, a 6.8% increase saw the previous year saw go from £36.5 billion to £37.8 billion.

Consumers opening new bank accounts routinely receive debit cards as standard. The UKCA also said 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.

Just over 60 million debit cards now have contactless technology.

uk cards association table showing card spending in 2016

Source: UKCA

Richard Koch, Head of Policy at The UK Cards Association, said:

“Since they were first launched in the UK in June 1987, debit cards have become a prime feature in the nation’s wallets. Now, almost 30 years later, more than half of all retail sales in the UK are made using a debit card. More recently, it has been the growth of contactless, as well as the increasing use of debit cards for online shopping, that has been driving the changes.”

 

Moving away from cash

The number of transactions on all cards have been increasing year-on-year by 0.9%,  reaching a monthly total of just under 1.2 billion. The UKCA attributes this growth has been the migration from cash to card, which itself  has been boosted by the appeal of contactless technology.

The number of contactless payments rose to 188 million in April, accounting for 16% of total card purchases, up from 6% twelve months ago.

graph card spending 2016

Source: UKCA

As the graph shows, debit card expenditure is more than double the credit card spending. Moreover, it’s increasing faster than credit cards.

 

Average transaction value is decreasing

The average transaction value (ATV) on all cards hovered around the £44.36 mark, increasing by a single pence between March and April. However, this is much lower than the £47.20 level last year.

On debit cards picked up by 7p to £41.10, while the ATV for credit cards fell by 20p to £55.29. The ATV on all cards via the online channel amounted to £86.40, down from £87.27 in March, and compares to £95.26 a year ago. In contrast, the ATV on contactless cards increased to £8.42, up by £1.50 on April 2015.

Retail sales dropped by 1p, whilst the largest decrease was registered in financial services, which recorded an ATV fall of 90p.

Overall it is clear that there is a consistent decline in the ATV, which the UKCA says has been evident since 2011. This is largely down to the changing habits of consumers, which sees them spending less but more frequently as well as the price wars between British supermarkets.

ukcajuly3

Source: UKCA

 

Online spending

In April, the volume of internet shopping continued to grow at double the rate (22%) of total card purchases (11%). The amount spent online actually accounted for a quarter (24%) of total card spending, whilst the amount of ecommerce purchases accounted for 13% of total card payments.

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