Finance UK has released a report announcing that debit card payments are now the UK’s favorite way to pay.
In 2017, the British economy saw 13.2 billion debit card payments occur, with cash payments falling behind for the first time at 13.1 billion. So why have Britons swapped the ATM for the card machine?
The answer is simple, convenience. Consumers no longer have to find an ATM or a bank to withdraw money in order to purchase goods and services.
Take for example, the contactless payment option. Introduced by Barclays bank in 2007, there were just 2000 contactless cards in use that year, which is a stark contrast to the 119 million in circulation in 2017. This number is undoubtedly attributed to the rise of card machines and cashless payment options available in shops across the UK. Even Transport for London offers customers the tap-to-pay method.
But it’s not just the big chains such as Tesco and John Lewis that have made contactless payments the norm. Smaller businesses have helped popularize the payment option too. As the current limit on contactless payments is £30, it makes swift purchases such as a morning coffee on the commute to work even quicker, and therefore more appealing.
Although a huge contributing factor, contactless payment isn’t the only reason cash payment’s popularity has taken a hit. In the past ten years, the UK has seen the emergence of online marketplaces, such as Amazon and eBay, changing the payment habits of the average UK shopper.
The birth of this behavior could arguably date back to the economic recession the UK experienced between 2008 and 2013. Throughout these years thousands of UK business closed their doors, some for good and some moved online. The recession is over, but stores are still moving from the physical world to the online marketplace and the rise of customers paying with a debit card is definitely a big reason why businesses are doing this.
The quiet evolution of the POS (point-of-sale) machine has played a part in the growth of debit card’s popularity too. Gone are the days of bulky card machines which were always slow to process card payments. These days they are sleek, fast and available at almost any check-out across the UK.
But what does this shift from cash payment to debit card mean for the future of payments?
If debit card payments are to remain as the favorite payment option in the UK, it’s expected to see massive growth within the payments industry as a result. Popular online-spending sectors, such as travel and gaming, have accelerated the success of payment processing companies such as Paymentwall. But as more customers and industries switch from offline to online the payments industry is expected to explode in the next ten years.
However, all their focus won’t be on improving debit cards payments systems, as other digital payment methods are expecting to excel in popularity. Mobile phone payments could easily be the next payment trend in-line for the throne. Tech industry giants Apple and Google have both released their own version of an e-wallet payment method in the past decade, and both are seeing a rise in the number of users. So perhaps it won’t be long until we see GooglePay and ApplePay battle it out to be the UK’s next number one payment method either.
External factors will come into play too. Despite the UK’s political vote to leave the EU, the globalization of economies is still likely to have some effect. Financial globalization could see the emergence of POS machines in the UK accepting local payment methods from other parts of the world. Especially from big economies like Korea, where prepaid card methods are prominent.
However, for the next ten years, UK Finance forecasts that debit card payments will remain first for UK consumers with cash in second place, its numbers decreasing year after year. What the results have shown is that consumer habits are susceptible to change, as are businesses. As they continue to shift, processing payments companies will need to be in a constant state of innovation while providing a quick and easy payment solution for the consumer.