Debit card spending is on track to overtake cash as a payment method in the UK this year, according to card processor Visa Europe.
The group, owned by the banks for which it processes payments, said that 77 per cent of its business was now done with debit cards, rather than credit cards, after a 10 per cent rise in debit card transactions last year.
Although credit card spending was stagnant, debit card business boomed. Total card spending at “points of sale” was up 3.7 per cent to £746 billion.
The busiest day for spending was December 23, when consumers performed more than 20 million transactions and spent more than £1 billion – up 28 per cent on the same day in 2008.
Visa said the swing was driven by a continued shift away from the use of cash, with the average transaction value across Europe down 4 per cent to £43. But there is also some evidence that, amid the recession, consumers have used debit cards to pay for purchases, rather than build up debt on
credit cards.
Underpinning that trend has been a rise in the number of retailers charging commissions, or “booking fees”, for payment with a
credit card. Retailers are barred from making such charges on debit card transactions, but justify the credit card levies on the grounds that they are passing on so-called interchange fees charged by banks.
Online shopping has also driven growth, with a quarter of all Visa spending in the UK conducted online over the Christmas period and 20 per cent for the year as a whole. December e-commerce spending across Europe on Visa cards was up 37 per cent.
“The growth in e-commerce is really staggering - the proportion has doubled in four years,” said Peter Ayliffe, chief executive of Visa Europe.
“The trends in card spending were a good barometer of how people were feeling and showed that the start of last year was the low point for consumer confidence. There had also been a bounce back in the second half of the year in the use of cards abroad as foreign travel increased again.”
