What we buy and how we spend: A decade of change
By UK CreditCards.com
Cash and coin payments gave way to cards in the past decade, and experts predict that cards will have a much-shorter lifespan. The Payments Council took a look back on the past decade in a February 2013 report, which found that Brits are splashing out on fun -- and moving toward a cash-free lifestyle.
Brits just wanna have fun
The report, entitled The Way We Pay, made it clear that Brits haven't let the global financial crisis get them too down, as entertainment spending has shot up 60% since 2001. Spending in restaurants and cafes more than doubled, while spending at cinemas has increased 63% (see Chart 1).
In fact, the money Brits spend on having fun is now almost one-and-a-half times what they pay for essential utilities, with £58bn forked out on leisure activities in 2012 compared to £34bn on gas and electricity bills.
Essential living expenses have ballooned as well, with housing costs doubling for owners and renters alike.
Flashing less cash, favoring debit over credit
While the amount Brits spend may be going up, the amount of actual money in their wallets is significantly decreasing, with the majority of transactions now being made by card. It may seem absurd now, but as recently as 2001, some two-fifths of home rental payments were made in cash, along with 43% of all retail spending in the UK. In the 10 years that followed, spending on plastic increased by a factor of almost four, as coins and notes began to fade away.
There have been some shifts within the realm of plastic, too, however. In 2001, there was an even 50-50 split between debit and credit, as far as spending volume went. By 2012, credit had ceded much of its territory to debit, thanks to more businesses taking debit and the rise of chip and PIN. Debit transactions were responsible for just over 70% of sales volume in 2012 (see Chart 2).
With coins and notes already on the way out, experts predict an even more cash-free future. This is largely due to the growing popularity of e-commerce, contactless and mobile payments. The researchers behind the study predict that by 2021, cards may well go the way of cash, while new payment technologies continue to rise.
"The 2000s were the decade of the debit card," said Adrian Kamellard, chief executive of the Payments Council, in a statement. "The 2010s are likely to be the decade of the mobile phone. Just as we can't imagine how we ever did without the internet, many people will soon wonder how we used to be so dependent on cash and cheque. Twenty years from now even cards may seem archaic."
Published: 1 March 2013
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