The number of card payments (volume) is continuing to grow strongly, reaching a monthly record of just under 1.4 billion. This was up by nine million (0.7 per cent) on May 2017.
Total spending across all cards types increased by 7.2 per cent in June to £57.1bn, compared with the previous year’s £53.5bn, according to new research from payments association UK Finance.
Of this, £15.4bn was spent online, accounting for a 21.7 per cent increase on June 2016.
When broken down further, the majority of spending took place on debit cards at £40.6bn, a rise of 7.3 per cent on last year. Credit card spending lagged behind at £16.5bn, but was up 6.9 per cent on June last year.
One of the main contributors to this growth was contactless payment, which accounted for 34 per cent of total card payments – up 18 per cent on the previous year.
However, the average value of spending was falling as it recorded relatively modest growth on May at just 0.3 per cent – amounting to £57.1bn.
During the second quarter, cardholders made 77m more purchases and spent £110m above the level recorded in the previous quarter. This increase was a result of GDP expanding by 0.3 per cent in Q2, up from 0.2 per cent in Q1.
When broken down into sectors, annual growth of card spending in retail sales increased by 4.8 per cent. The number of transactions in the retail sector increased by 4.1m, or 0.5 per cent, to 880m, with corresponding spend rising by £19m to £26.1bn.
However, the retail sales average transaction value (ATV) for retail sales declined by 12p to £29.69. By comparison, ATV for the online channel increased by 29p to £82.71.
Commenting on the report, Fujitsu UK and Ireland Financial Services Business chief technology officer Ian Bradbury said: “With the use of contactless payment cards soaring by over 140 per cent in the past year alone, the news that UK credit and debit card spending is growing at its fastest rate in nine years comes as no surprise. We expect contactless payments to become an increasingly important feature in the British payments landscape. Making up around a third of all plastic card transactions – up from around 10 per cent just a couple of years ago – the convenience and ease of contactless payment means that such transactions are continuing to gain traction with the public. Not only this, the high-growth adoption of contactless payments underlines the fact that consumers and retailers choose to adopt solutions that are secure, quick and easy to use, as well as ubiquitous.
“Contactless payments are not only easier to use than Chip and Pin, they are in many ways more practical than small change and small notes. The significant parallel growth in debit card transactions also suggests that this is not growth just fuelled by debt and easy credit – much of this increase will be a result of contactless payments being made purely due to ease. What’s more, contactless payments have the added value of fuelling other payment solutions, such as Apple and Google and other wearable technology – which can’t be done as easily with Chip and Pin.
“Finally, the success of contactless payments demonstrates that consumers are quick to adopt new payment solutions that focus heavily on improving the consumer experience. However, because consumer experience can cover many aspects, including convenience, security, speed and ubiquity, it’s vital that providers put in place ways to improve the experience over current solutions. If future payment solutions do not address all of these areas – which are fast becoming a customer expectation – then they are unlikely to be successful.”