Consumer spending has undergone a revolution over the past decade with restaurants, pubs and online retailers benefiting from the explosion in the use of payment cards, new data shows.
A report from The UK Cards Association reveals the central role cards have played in our changing spending patterns over the past decade.
It is the first ever publication of a decade of whole-market card spending data and reveals a huge growth in spending using cards, from £270 billion in 2005 to £566 billion in 2014. Debit cards accounted for 58 per cent of these transactions in 2005, rising to 71 per cent in 2014.
Number of purchases split by credit and debit cards, billion
Annual totals of card purchases and expenditure
Proportion of retail sales made on payment cards and cash and cheques
With data broken down by type of business, the report highlights how dramatically our spending habits have changed since 2005, including:
- A steep decline in spending at record shops (-71 per cent) and video stores (-49 per cent) as consumers moved to online streaming services, supported by increasing smartphone and tablet ownership. There were 1.3 billion online transactions in 2014, amounting to £119 billion. Around a quarter of all online transactionsare now at entertainment websites, equating to 8 per cent of all spending online
- More businesses than ever before accepting card payments. Card spending in pubs reached almost £5 billion last year, compared to £1 billion in 2005
- Supermarket card spending almost doubling from £51.2 billion in 2005 to £99.5 billion in 2014. At the same time, the average supermarket transaction fell from £31 in 2009 to £25 in 2014, as shoppers swapped the weekly shop for more frequent, more local visits
- Restaurants were one of the key beneficiaries of increased card spending within the entertainment sector, taking £8.6 billion in 2005, rising to £22.2 billion in 2014. The entertainment sector also saw the strongest rate of growth, with the number of card transactions rising from 500 million in 2005 to 1.9 billion in 2014
- A significant increase (+£22 billion) in the use of cards by individuals and businesses as government services went online.
Richard Koch, Head of Policy at The UK Cards Association, said:
“These figures show for the first time how our spending patterns have changed and the central role payment cards have played in this.
“Today we think nothing of paying for a coffee and a sandwich with a contactless payment card or streaming films on a smartphone which is also enabled for mobile payments. This is so different to a decade ago when we carried more cash and shopped in high street stores.
“Even during the last recession, the use of cards as a proportion of overall spending continued to grow as customers recognised the convenience, ease and security of this method of payment.
“Cards are accepted in more places than ever before and with innovations such as contactless cards and digital wallets, this trend is sure to continue.”
Figures show some 48.5 million people had debit cards in 2014, up from 40.8 million 10 years earlier. Payment cards were used for 54 per cent of retail sales in 2005, rising to 75 per cent by the end of 2014.
The broader economic context of the decade brought with it robust growth in 2005, then recession followed by a return to growth. A strong upturn in the economy in 2013/14 coincided with a resurgence in the housing market and significant improvement in consumer confidence.
While GDP fell in 2008 and 2009, spending on cards increased, the report shows. Despite the economy shrinking, card spending increased by seven per cent and five per cent in 2008 and 2009 respectively, as more people used cards as their main method of payment.
Retailers responded to changing consumer habits, with an explosion in e-commerce. Smartphone and tablet ownership increased over the period, leading to innovations such as digital wallets and mobile payments which are supported by the cards system. These also enabled sole and mobile traders to accept card payments.
Accordingly, the number of card payments doubled, from 6.1 billion in 2005 to 12 billion in 2014.
In 2007 contactless payment cards were introduced for the first time. The limit for contactless payments was raised to £30 in September 2015 and figures showed £2.6 billion was spent on contactless in the first six months of this year.
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