New research by Timetric shows that UK consumers continue shunning credit cards in favour of debit cards, a trend which is set to prevail in the next few years.
In terms of transaction volume and value, debit cards are expected to remain a leading payment instrument in the market over the forecast period (2015 -2019). Debit cards accounted for the largest share, with 78.7%, in terms of transaction value, compared to credit cards with a share of 17.7% and charge cards with 3.5%. Furthermore, the share of debit cards is anticipated to further increase over the forecast period, to reach 80.0% in 2019.
This trend will be supported by factors such as growing consumer awareness of debt control, the continued migration of low-value cash payments and, most notably, increase in the use of contactless cards. It will also be supported by the increasing penetration of POS terminals and ATMs over the forecast period, offering better access to banking services.
According to Kartik Challa, Analyst at Timetric: “UK consumers preferred to use debit cards over credit cards for online shopping, reflecting an inclination towards risk aversion. Another reason supporting the increased use of debit cards is that additional surcharges apply to shopping online with credit cards.”
Contactless to aid the debit cards market
An increase in debit card use is also supported by the increasing acceptance of contactless payments at retail outlets. This development will likely bolster debit card transaction volume and value over the forecast period.
“The ease of making quick payments using contactless cards has grown in popularity among both consumers and retailers in the UK. An increase in the number of retail outlets accepting contactless payments enabled consumers to opt for contactless card payments. To further encourage these payments, the UK Cards Association increased the spending limit from US$31.5 (GBP20) to US$47.9 (GBP30), effective from September 2015 onwards,” comments Challa.
According to Timetric, the number of contactless cards increased by 41% year on year in September 2015. Furthermore, the overall number of these cards is expected to reach 78 million by the end of 2015, equivalent to 42.5% of all UK payment cards.