Plastic's fantastic, despite economy being drastic

Debit cards up as credit cards slide

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By Julian Goldsmith, 27 October 2008 17:11

NEWS

Despite the continuing pessimism about the global economic climate over the last 12 months, UK spending using plastic cards has increased 11 per cent in 2008.

According to Datamonitor, the value of transactions made with debit, credit and charge cards this year is expected to reach £594bn, up from £536bn in 2007.

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Overall, card payments have taken market share from other forms of payment such as cash or cheques. However, the research house found credit card spend has been eaten up by the growth in debit transactions. The value of credit card transactions is actually expected to drop by 1.1 per cent in the period.

Datamonitor financial services analyst Andrew Fabricius said in a statement: "The fall in the value of credit card [transactions] reflects the fact that consumers are less confident about spending on credit and are also spending less on large items."

Fabricius went on to explain online credit card transactions were likely to remain strong as shoppers felt they had a greater degree of protection against fraud and retailers going under.

Debit card payments appear to be also eating further in to cash payments as consumers are being encouraged to make small payments with wave-and-pay cards, such as the Barclaycard OnePulse.

Datamonitor forecasts the total value of transactions by plastic cards to reach £747bn by 2012. Credit card transactions will grow overall in that time but will shrink as a proportion of plastic card spend, from 20 per cent this year to 17 per cent in 2012.

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