Payments revolution gathers pace

September 9, 2010

Cheque usage plummets, while consumers shun credit cards and cash making the debit card king

The total value of payments in the UK economy fell 0.6% in the second quarter of 2010, according to the latest data from the Payments Council.

Cheque usage dropped by £21.5bn, down 10% compared to the same period in 2009 as businesses and consumers switched to faster and more convenient electronic payments and cards.

The use of debit cards (paying for goods and services) and Faster Payments (for transferring money between accounts) took up all the slack left by cheques and ate into cash payments.

Debit is the new plastic

Debit card usage rose dramatically by 67%, while the amount of cash withdrawn from cash machines was £1.6 billion lower than in the second quarter of 2009. Credit card spending was also weak, rising just 3.9%, barely ahead of inflation.

Sandra Quinn, Payments Council director of communications, stated: "We use cash less where there is an easy alternative, but we're years away from cash falling out of fashion. Debit cards are taking over our daily purchases, while Faster Payments are fast becoming how we transfer our money electronically.”

"The overall payments figures show a distinct lack of energy in the UK economy. The recovery may be underway, but total payment values are not suggesting a dramatic return to strong growth," she added.