Visa Europe this year expects spending on Visa debit cards to overtake spending with cash in the United Kingdom because of the recession.
“This recession seemed to have the biggest impact on consumer spending in the first half of 2009, but it strengthened in the second half of the year,” Peter Ayliffe, Visa Europe chief executive, said in a statement. “What is changing is the way people spend their money. There has been a marked shift toward debit card spending, particularly to lower-value transactions, as well as continued growth in online spend.”
Visa expects debit card spending to grow, in part, because payWave, its contactless technology, is becoming more common in Northern Ireland, England, Scotland and Wales. Sixty million consumers live in the four countries.
“There are already 5 million contactless cards in the UK, but we expect this to more than double by end of 2010, Ayliffe said. “[Contactless payments] provide a serious alternative to using cash for making small, everyday payments.”
Online purchasing also is driving more use of Visa debit cards. “Around 20% of Visa spending in the UK is now online, and this rose to approximately 25% during the Christmas period,” Ayliffe said.
Visa debit cards already have made their mark, according data released Jan. 19 by Visa Europe, a London-based payments organization owned by 4,147 banks in 36 countries across Europe.
For the 12 months ended June 30–the latest figures available–spending on Visa debit cards reached £165.5 billion (US$265.4 billion), a 9.4% increase from the previous 12-month period.
“One in four pounds are transacted on Visa debit cards,” says a Visa Europe spokesperson.
The UK Cards Association, a London-based organization that sets strategy for UK payments, reported in 2009's third quarter, consumers made an estimated 22.5 billion cash payments in the UK worth £267 billion.
The total number of debit card purchases during the same three-month period reached 1.5 billion for an eight percent growth rate, and the total value of debit card purchases was £65.9 billion for a 6.6% growth rate, the association reports.
In Northern Ireland, debit cards accounted for 33% of payments compared with cash, which accounted for 28% of payments during 2009's fourth quarter, says Megan Bramlette, managing associate for Auriemma Consulting Group. During the same three-month period, however, payments made with debit cards lagged payments made with cash in England, Scotland and Wales, Bramlette says.
In England, cardholders paid 31% of transactions with debit cards compared with 32% made with cash. In Scotland, cardholders paid 30% of transactions with debit cards compared with 33% paid with cash. In Wales, 31% of consumers paid with debit cards compared with 32% who paid with cash.
The boom in debit card spending also has affected credit card spending, which is stagnant. in 2009's third-quarter, there were 500 million credit and charge card purchases, for a growth rate 0.1%, and the total value of credit and charge card purchases was £31.6 billion, down 1.9%, reports the UK Cards Association.
UK banks are issuing more debit cards, says the Visa Europe spokesperson. For the 12 months ended June 30, they issued a combined 58 million Visa debit cards, up 9.4% compared with 53 million debit cards, the previous 12 months, the Visa spokesperson says. Some sixty million consumers live in the UK.
Visa debit cards in the UK represent a huge market for Visa Europe, which reported 244 million debit cards for 12-month period ended June 30, an increase of 8% compared with the previous 12-month period.
