5th January 2016 at 12:30pm
Cash vs Card
Do you carry cash on your person at all times? Or are you more likely to reach for your credit or debit card when it comes to paying for your latest purchase?
For many of us it’s the latter so it didn’t come as a huge surprise when The UK Cards Association released their latest findings revealing the increasing popularity of card over cash. But what did surprise us is just how much plastic payment has changed our spending habits over the last decade. Let’s take a look.
Card spending booms
According to the UK Cards Association, consumer spending has been revolutionised over the past decade by the increasing use of payment cards – and restaurants, pubs and online retailers are reaping the rewards.
The report shows a huge surge in spending using card – from £270 billion in 2005 to a staggering £566 billion in 2014. And while debit cards accounted for 58% of these transactions in 2005, this rose to 71% in 2014. Here are our top five highlights from the report:
- Dramatic decline in spending at record shops (-71%) and video stores (-49 %) with consumers using online streaming services instead.
- Card spending in pubs reached almost £5 billion last year, compared to £1 billion in 2005.
- Supermarket card spending nearly doubled from £51.2 billion in 2005 to £99.5 billion in 2014.
- Restaurant card spending soared from £8.6 billion in 2005 to £22.2 billion in 2014.
- The entertainment sector saw the most growth, with the number of card transactions rising from 500 million in 2005 to 1.9 billion in 2014.
Online payments lead the way
There’s no doubt that the internet has played a huge role in changing our spending habits as we saw online card payments jump by a fifth in just one year.
‘Whether it’s on the move using a mobile device, at work or home, the rise in online transactions shows how increasingly important the internet is in our everyday lives.’ Richard Koch, Head of Policy and The UK Cards Association, explains how ‘card payments are central to this transformation, enabling companies to do business online and consumers to make safe, reliable transactions.’
Contactless payments are on the up and up
Contactless payments are another contributing factor to the huge increase in card spending. Figures from The UK Cards Association, show over £2.5 billion was spent using contactless cards in the first half of 2015. The increasing popularity of contactless payment meant a new limit of £30 was introduced in September 2015.
Apple pay is a new contactless payment system that lets people use their iPhones to pay in high street shops and is another example of how our spending habits are changing. Gone are the days of trying to find the right card and remembering which PIN to use. Now you can use your credit cards, store credit cards and rewards cards with just a touch of your iPhone, Apple Watch or iPad. And according to Apple, paying in shops or within apps has never been easier or safer.
What does the future hold?
As we leave 2015 behind us, we can’t help but wonder what 2016 is going to bring. Is cash on the road to becoming obsolete? Just as the magnetic strip revolutionized payment by card, near-field communication and other fast-evolving technologies have led to payment using mobile technologies. Could mobile payment be the future?