Cash finally succumbed to the rise of the
debit card over the summer, as debit cards passed the historic milestone over the August Bank Holiday, according to figures from the UK Payments Council.
That weekend, the running total of debit card spending (£272 billion) finally overtook the cumulative amount of cash spent (£269 billion) in the economy for the first time ever.
The number of purchases on debit cards rose 10 per cent this summer compared to last, an additional 1.6 million transactions on debit cards every day between July and September, says the Payments Council.
The amount spent rose almost 11 per cent.
Debit cards were used three times more frequently than credit cards in 2010 Q3.
As a further indication of the move away from cash, withdrawals from cash machines fell 1.5 per cent in the third quarter, compared with the same period in 2009, a decline in real terms of almost five per cent.
Credit card spending remained fairly flat in the third quarter of 2010, when compared with the same period in 2009. Summer credit card spending was up just 2.2 per cent, well below the Consumer Price Index (CPI), while the total balance outstanding on our credit cards fell to its lowest level since 2003, showing that customers are taking repayments seriously, says the Payments Council.
Cheques accelerated their flight into the payments wilderness, as 104 million fewer cheques were written over the last twelve months compared to the previous year. At this pace of decline, both the number of cheques written and the value of money they move will almost halve by 2015.
"Cash is too cumbersome for many consumers these days - they prefer a card for anything more than the smallest transactions,” said Sandra Quinn, Director of Communications at the Payments Council.
“We now expect our
debit cards to be accepted everywhere we go - in pubs and clubs, at the corner shop, online and on the high street. Having quickly supplanted cheques, then claimed the scalp of credit cards, they have now usurped cash's throne too.
"Once credit cards were the only convenient way to pay as alternatives to physical cash and cheques, but now people have far more options. Conscious of the need to repay credit borrowed, consumers are increasingly choosing their debit card over credit card.
“Contrary to expectation, the possibility of greater financial stress during the recession and beyond has not driven people to rely more heavily on their credit cards.
"Cheques are very rarely used by consumers to pay for things - they are now mainly reserved for larger transactions, especially moving savings and investments around, although they are still popular for giving gifts."
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