Digital & Card Payment Yearbooks: Cards – past their peak?

The 2021-2022 Digital and Card Payment Yearbooks from Payments Cards & Mobile suggest payment card use may be starting to decline, to be replaced by digital wallets, direct-to-account payments and other methods.

While this has been predicted by some for a while, we’re now starting to see solid evidence of lower card use:

• Although cash use has declined rapidly to less than 20% in markets like the UK and Netherlands, and just over 40% in cash-friendly Germany, there has not been a corresponding increase in card use, suggesting consumers are turning to other methods of payment, including BNPL direct at point of sale, account-to-account payments and others.
• ATM prevalence and usage is down sharply, faster than the five-year trend. The number of ATMs across Europe dropped by 5.4%, while usage fell four times faster, down by 20.1% across Europe. When measured by head of population, the average European used an ATM 25% less than last year. Considering the longer-term trend of declining ATM use, these figures are significant.
• Despite e-commerce spending having almost doubled (170% growth) since 2016, with compound annual growth of 21.8%, we have not seen a corresponding increase in card usage online – again suggesting consumers are turning to other methods. The number of online payments using cards grew only marginally over the last year, up just 0.8%, with value up by 2.7%.

• Debit cards are dominating. The number of credit cards grew by just 2.1% last year, while debit card numbers rose more than twice as fast, by 5.5%. Debit cards now constitute 69.7% of all cards in Europe, a historical high, while credit’s share is in long-term decline. Since our research was conducted, continued growth in Buy-Now-Pay-Later products will no doubt have further eroded credit’s position.
• POS infrastructure is static. While it’s no surprise to see POS volumes and values plummet in a pandemic, the number of POS terminals across Europe grew by just 1.1% last year.
• Total use of cards declined in advanced markets such as the UK and Norway, while growth in Sweden and Finland was marginal at best. Across Europe, total usage of cards declined by 1.9%, the first time a drop had been recorded in at least five years. When it comes to card brands, Mastercard saw the highest increase in card numbers, up to 651 million, while Visa remained broadly static at around 757 million cards. By contrast, American Express saw card numbers down by 9.46%, and Diners Club/Discover dropped by 8.33%.

Taken together, these data look like classic signals of cards as a product entering the third stage of the life cycle: usage is beginning to decline and players are pulling out of the market, while card infrastructure (in terms of ATMs and POS terminals) appears to be growing more slowly than at any time in the last five years.

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