Consumers are turning their backs on cheques and even credit cards, as debit card usage soars.
The latest report by the Payments Council, which oversees the strategy for payment methods in the UK, shows a very large drop in the usage of cheques by consumers.
The average daily usage of cheques fell by 290,000 last quarter, when compared to the number of cheques written in the same period in 2009. This means that consumers were spending £21.5bn less with cheques than last year.
Credit card spending is also weak, the report shows, rising by 3.9% which is only slightly ahead of inflation. The amount consumers spent on credit cards was matched by the amount paid off as they shied away from loading up on additional borrowing.
It is debit card usage that is increasing rapidly, however, up by over 12% compared to last year, as people try and control their borrowing, using their existing funds for purchases on a daily basis. The strong move away from cheques, which is being fueled by banks and retailers, is also likely to be driving a switch to paying by debit cards instead.
Commenting on these findings, and how they illustrate the health of the economy, Sandra Quinn, director of communications said:
“The payments revolution continues apace in the UK. Cheque usage is shrinking dramatically, while credit cards hold less appeal for consumers and businesses. 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.”