Debit Card Report April 2015

Debit Card Report April 2015

Monthly debit card report April 2015 Apart from actual card numbers the data referred to depict the underlying trend following seasonal adjustment using X- 12 ARIMA. The X-12 ARIMA ly seasonal adjustments include trading days and leap years. Growth rates are ly. The 2014 data set has been fully reconciled with annual data published in UK Payment Statistics 2015. Number of cards Debit cards represent the most convenient method of obtaining funds from a person s account and also rank among the most widely accepted methods of payment. Most issuers provide a debit card as standard when new accounts are opened. Their significance has further been boosted by the popularity of smartphone and tablets, making online payments more accessible, and the growing acceptance of contactless cards. By the end of 2014 almost 49 million people held a debit card, representing around 91% of the UK adult population. Thus there is limited scope for large scale increases in future growth of the cards in issue. At the end of April 2015 the debit cards in issue stood at 96.7 million after declining by 0.2% over the. This follows on from above trend growth in January of 0.8% and figures of 0.1% and 0.3% in February and March respectively. By comparison, growth in the contactless cards in issue is strong with more cards being re-issued with contactless functionality and new cards provided with this feature as standard. According to the latest data reported to The UK Cards Association, the debit cards with contactless functionality in circulation rose by 13% between January and April to reach 43.4 million, accounting for around 45% of all debit cards, up from 28% a year ago. Chart 1 Number of debit cards and contactless debit cards in issue Domestic spending Near universality in the holding of debit cards, their high propensity of use compared to other non-cash payment methods and growing acceptance by merchants has meant that they continue to acquire market share. 2014 was significant as cash payments fell to 48% of total payments, the first year they have fallen below 50%. Debit cards accounted for the next highest share of payments with 22%, up from 20% in 2013. The Payments Council predict that the future decline in cash market share will mostly be taken up by debit cards. Their figures reveal that by 2024 cash use will decline to 29% of total payments while that of debit cards will increase to 36%. These debit card trends have been evident in the growth in s over the past few years. Debit card volumes grew 10.0% in 2014 to reach 9.2 billion; this compares to growth of 8.3% in 2013. Meanwhile debit card s rose 8.4% to 408 billion, down from almost 9% a year earlier. These strong patterns of growth have continued into the first part of 2015. Between January and April 2015 volumes grew at an average ly rate of 1.0% to reach 829 million. At the end of April, s stood at 37.5 billion following an average ly growth rate of 1.5% since January. Debit card spend has grown even in times of economic hardship. This is a sign of how important debit cards are and how useful they have become to consumers as a payment tool. Over the past few years there has been a migration of online card payments from laptops and PCs to smart phones and tablets, particularly among younger adults. These mobile devices have been driving a significant proportion of the growth in debit card spend because they allow real time access to the internet regardless of time or location. Some merchants encourage online spend by offering cashback rewards for doing so. Page 2

Contactless technology has also had a positive impact on debit card payments as it gains popularity with both consumers and merchants. The most high profile adopters of contactless cards have been Transport for London (TfL). Anecdotal evidence suggests that by making payments for journeys on the TfL network more efficient, contactless cards encourage passengers to take more journeys 1. Furthermore, it is possible that some debit card purchases are being driven by the pursuit of cashback rewards provided by the issuer 2. Chart 2 Domestic ly debit card spending International spending Cross-border s have grown at a much faster rate than domestic s over the past few years, albeit from a much lower base. Cross border purchases grew 56% in 2014 to 979 million, compared with growth of 40% in 2013. Meanwhile cross border spending increased by 42% to 25 billion up from 22% in 2013. A significant proportion of this growth was accounted for by overseas sterling s (OSTs), i.e, payments made in the UK and processed abroad. Another proportion of this growth in cross border s has been driven by advantages of using these cards abroad, especially when compared to other methods of payment. Debit cards are more convenient to hold than Travellers Cheques or cash. Transaction fees for debit card purchases also tend to be cheaper than for credit cards. In fact, some issuers do not charge fees for cross border purchases made with debit cards. Between January and April of 2015 there was average ly growth of 0.8%. This increased cross border purchases to 99.4 billion and compares with average ly growth of just over 3% for the previous six s. Meanwhile cross border spending reached 2.6 billion at the end of April following ly average growth of 1.4% compared with 3.4% for the previous six s. 1 http://www.economist.com/news/britain/21651847-what-london-underground-reveals-about-work-capital-squeezing 2 http://www.tescobank.com/current-accounts/ Page 3

Chart 3 International ly debit card spending s The domestic average (ATV) has risen continuously from a figure of 44.07 in October 2014 to 45.24 in April 2015. The Domestic ATV has stabilised over the past few years ranging between 40 and 50 such that the long term trend appears to be flat. Given how synonymous debit cards are with bank accounts and how ubiquitous they are it is likely that this trend masks huge variations in payments. The international ATV has also been on a continuous upward trend since October 2014 increasing from 25.40 to 26.30 in April 2015. This bucks the continuous downward trend that has been evident for a years. Chart 4 Monthly average s Domestic spending The average ly spend has been increasing since January 2015, from 373 to 388 in April 2015. When considering the average s per, this measure has also increased continuously and incrementally from 8.3 in January 2015 to 8.6 in April 2015. These two domestic measures have increased each year. These increases are the result of greater rate of debit card spend enabled by technological improvements in payments with contactless and online spend the most high profile and notable examples. Page 4

Chart 5 Per card ly averages (domestic spending) International spending When compared to domestic, international spending figures seem low. That being said, average spend per debit card rose from 26.16 in January 2015 to 27.05 at the end of April 2015. Meanwhile the international s also increased, from 1.00 in January and February to 1.03 in April 2015. On the surface, the purchases may seem low but are plausible when multiple holdings of debit cards are taken into consideration. Around 47% of the debit card holding population, own two or more cards. As secondary and further additional cards are typically used less frequently, this depresses the per card averages. Chart 6 Per card ly averages (international spending) Tables Table 1 Cards in issue Table 2.1 Domestic retail s, all cards Table 2.2 Domestic retail s, Visa Debit, Debit MasterCard and Electron cards Table 3.1 International retail s, all cards Table 3.2 International retail s, Visa Debit, Debit MasterCard and Electron cards Contact: Nigel Burt; nigel.burt@ukpayments.org.uk camis@ukpayments.org.uk 020 3217 8244 or 020 3217 8720 Page 5

Debit cards Table 1 Cards in issue Number of cards millions All cards 1 Visa Debit Electron Debit MasterCard 2 Solo 3 Number % Change Number Number Number Number 2004 65.5 4.3% 28.8 8.0 22.5 6.3 2005 67.0 2.2% 33.2 9.2 20.0 4.5 2006 68.7 2.5% 34.7 9.1 20.3 4.6 2007 71.6 4.3% 39.9 5.8 21.1 4.7 2008 76.2 6.5% 44.1 5.1 21.7 5.3 2009 79.2 3.9% 53.2 5.3 17.5 3.3 2010 84.6 6.8% 72.5 4.1 8.0 * 2011 86.3 2.0% 80.4 3.2 2.8 * 2012 91.0 5.5% 86.7 1.5 2.9 * 2013 95.7 5.1% 91.5 1.3 2.9 * 2014 95.7 0.0% 91.4 1.0 3.4 * Visa Debit, 4 Debit MasterCard Electron Apr-14 95.7 0.0% 94.6 1.1 * * May-14 95.4-0.3% 94.4 1.1 * * Jun-14 95.1-0.3% 94.1 1.0 * * Jul-14 95.5 0.4% 94.5 1.0 * * Aug-14 95.7 0.2% 94.7 1.0 * * Sep-14 95.2-0.5% 94.2 1.0 * * Oct-14 95.1-0.1% 94.2 1.0 * * Nov-14 95.3 0.2% 94.4 0.9 * * Dec-14 95.7 0.4% 94.7 1.0 * * Jan-15 96.5 0.8% 95.5 1.0 * * Feb-15 96.6 0.1% 95.6 1.0 * * Mar-15 96.9 0.3% 95.9 1.0 * * Apr-15 96.7-0.2% 95.7 1.0 * * 1 The 2014 data set has been fully reconciled with annual data to be published in 2015 UK Payment Statistics. 2 Includes Maestro cards. 3 The Solo scheme terminated on 31 March 2011. Solo cards are included with Debit MasterCard from 2010. 4 Visa Debit and Debit MasterCard figures are combined from 2011. * Indicates data are not available. Institutions currently issuing Visa Debit/Electron and Debit MasterCard are: AIB Bank (FT) Lloyds Banking Group Bank of Cyprus National Australia Group Bank of Ireland Nationwide BS Barclays Bank Virgin Money plc C. Hoare & Co The Santander Group Citibank Standard Chartered Danske Bank The Co-operative Bank Harrods Bank The Royal Bank of Scotland Group HSBC Bank plc Tesco Bank Investec Bank TSB Bank MEMBER CIRCULATION Page 6

Debit cards Table 2.1 Domestic retail s 1 All cards 2 All cards, unadjusted data Volume Value ly spend s per Volume Value Millions millions Millions millions 2004 3,663 149,009 40.68 194 4.8 3,690 150,152 2005 4,092 170,965 41.78 215 5.2 4,084 170,672 2006 4,478 194,501 43.43 241 5.5 4,514 195,265 2007 4,743 215,218 45.38 259 5.7 4,939 220,682 2008 5,198 232,945 44.81 265 5.9 5,383 241,088 2009 5,858 265,700 45.35 288 6.3 5,859 264,313 2010 6,580 306,446 46.57 313 6.7 6,386 291,615 2011 7,384 338,404 45.83 330 7.2 7,308 333,652 2012 7,680 344,299 44.83 325 7.3 7,755 347,675 2013 8,320 375,103 45.09 338 7.5 8,359 378,054 2014 9,151 406,483 44.42 358 8.1 9,187 408,278 Apr-14 751.2 33,451 44.53 355 8.0 750 34,228 May-14 755.2 33,599 44.49 357 8.0 775 34,629 Jun-14 759.0 33,716 44.42 360 8.1 766 34,324 Jul-14 762.9 33,814 44.32 359 8.1 776 35,230 Aug-14 767.8 33,932 44.20 360 8.1 747 33,098 Sep-14 773.8 34,121 44.09 364 8.3 737 33,405 Oct-14 780.9 34,410 44.07 367 8.3 805 35,309 Nov-14 788.4 34,812 44.16 371 8.4 787 33,404 Dec-14 796.5 35,336 44.37 375 8.4 898 37,739 Jan-15 804.3 35,931 44.67 373 8.3 737 38,882 Feb-15 812.5 36,539 44.97 378 8.4 737 33,727 Mar-15 821.1 37,089 45.17 383 8.5 857 39,428 Apr-15 829.3 37,516 45.24 388 8.6 824 38,256 1 Excludes cash withdrawals from ATMs and at bank counters. 2 Depicts the underlying trend following seasonal adjustment using X-12 ARIMA. The X-12 ARIMA ly seasonal adjustment takes into account trading days and leap years. MEMBER CIRCULATION Page 7

Debit cards Table 2.2 Domestic retail s 1 Visa Debit, Debit MasterCard 2 and Solo cards: unadjusted data Total for year to date Total for year to date ly spend s per Volume millions Value millions Apr-14 744 2,872 34,074 130,543 45.77 366 8.0 May-14 769 3,641 34,469 165,012 44.84 371 8.3 Jun-14 761 4,402 34,177 199,189 44.93 368 8.2 Jul-14 770 5,172 35,076 234,265 45.52 377 8.3 Aug-14 741 5,913 32,943 267,208 44.44 353 7.9 Sep-14 732 6,645 33,259 300,467 45.44 358 7.9 Oct-14 799 7,444 35,150 335,617 44.02 379 8.6 Nov-14 781 8,225 33,241 368,858 42.54 357 8.4 Dec-14 892 9,117 37,565 406,423 42.12 402 9.6 Jan-15 731 731 38,724 38,724 52.97 406 7.7 Feb-15 731 1,462 33,580 72,304 45.92 351 7.7 Mar-15 851 2,313 39,259 111,563 46.14 409 8.9 Apr-15 818 3,131 38,088 149,651 46.55 398 8.5 Electron cards: Non Seasonally adjusted Total for year to date Total for year to date ly spend s per Volume millions Value millions Apr-14 6 23 154 597 26.43 136 5.2 May-14 6 29 160 757 26.96 154 5.7 Jun-14 6 34 147 905 26.18 149 5.7 Jul-14 6 40 154 1,059 26.38 161 6.1 Aug-14 6 46 155 1,214 26.87 164 6.1 Sep-14 6 51 146 1,360 26.33 155 5.9 Oct-14 6 57 158 1,518 26.50 169 6.4 Nov-14 6 63 163 1,681 26.88 175 6.5 Dec-14 6 70 174 1,855 27.00 185 6.8 Jan-15 6 6 158 158 27.56 161 5.8 Feb-15 6 11 147 305 26.48 150 5.7 Mar-15 6 18 168 474 26.33 177 6.7 Apr-15 6 24 169 642 26.83 176 6.6 1 Excludes cash withdrawals from ATMs and at bank counters. 2 Includes Maestro cards. MEMBER CIRCULATION Page 8

Debit cards Table 3.1 International retail s 1 All cards 2 All cards, unadjusted data Volume Value ly spend s per Volume Value Millions millions Millions millions 2002 2004 51 2,626 51.17 3.42 0.07 52 2,711 2005 70 3,407 48.74 4.29 0.09 71 3,448 2006 82 4,985 61.05 6.17 0.10 83 5,184 2007 88 5,186 59.26 6.23 0.11 88 5,243 2008 88 5,573 63.00 6.35 0.10 89 5,705 2009 95 5,549 58.17 6.01 0.10 99 5,719 2010 165 7,449 45.11 7.61 0.17 164 7,447 2011 254 9,451 37.17 9.21 0.25 255 9,299 2012 448 14,515 32.41 13.71 0.42 456 14,910 2013 628 17,675 28.14 15.92 0.57 634 17,862 2014 979 25,015 25.56 22.05 0.86 992 25,558 Apr-14 74.9 1,898 25.34 20.12 0.79 67.5 1,813 May-14 78.8 1,961 24.87 20.86 0.84 80.0 1,988 Jun-14 81.8 2,027 24.78 21.62 0.87 84.1 2,143 Jul-14 83.8 2,102 25.09 22.33 0.89 86.4 2,283 Aug-14 85.9 2,185 25.43 23.18 0.91 87.9 2,351 Sep-14 89.0 2,269 25.48 24.19 0.95 85.5 2,240 Oct-14 92.4 2,348 25.40 25.05 0.99 94.7 2,374 Nov-14 95.0 2,419 25.45 25.75 1.01 98.6 2,415 Dec-14 96.3 2,478 25.73 26.28 1.02 114.4 2,857 Jan-15 96.5 2,523 26.14 26.16 1.00 93.9 2,410 Feb-15 96.5 2,560 26.52 26.51 1.00 87.5 2,215 Mar-15 97.4 2,592 26.61 26.75 1.01 96.2 2,511 Apr-15 99.4 2,615 26.30 27.05 1.03 93.9 2,517 1 Excludes cash withdrawals from ATMs and at bank counters. 2 Depicts the underlying trend following seasonal adjustment using X-12 ARIMA. The X-12 ARIMA ly seasonal adjustment takes into account trading days and leap years. MEMBER CIRCULATION Page 9

Debit cards Table 3.2 International retail s 1 Visa Debit, Debit MasterCard 2 and Solo cards: Unadjusted data Total for year to date Total for year to date ly spend s per Volume millions Value millions Apr-14 67 257 1,799 6,858 26.97 19.31 0.7 May-14 79 336 1,972 8,830 24.98 21.21 0.8 Jun-14 83 419 2,126 10,955 25.58 22.91 0.9 Jul-14 85 505 2,265 13,220 26.53 24.31 0.9 Aug-14 87 592 2,333 15,553 26.88 25.00 0.9 Sep-14 84 676 2,222 17,775 26.32 23.93 0.9 Oct-14 93 770 2,353 20,128 25.17 25.36 1.0 Nov-14 97 867 2,392 22,520 24.57 25.72 1.0 Dec-14 113 980 2,832 25,352 25.05 30.34 1.2 Jan-15 93 93 2,389 2,389 25.79 25.03 1.0 Feb-15 86 179 2,196 4,586 25.43 22.98 0.9 Mar-15 95 274 2,490 7,076 26.21 25.96 1.0 Apr-15 93 367 2,496 9,572 26.92 26.08 1.0 Electron cards: Non Seasonally adjusted Total for year to date Total for year to date ly spend s per Volume millions Value millions Apr-14 0.8 3.1 13 51 16.80 11.61 0.7 May-14 1.0 4.1 16 67 15.73 15.32 1.0 Jun-14 1.0 5.1 17 84 16.44 17.35 1.1 Jul-14 1.1 6.2 18 102 16.78 18.95 1.1 Aug-14 1.1 7.3 18 120 16.55 19.39 1.2 Sep-14 1.1 8.4 18 138 16.84 18.96 1.1 Oct-14 1.2 9.6 20 159 16.87 21.81 1.3 Nov-14 1.3 10.9 23 181 17.47 24.35 1.4 Dec-14 1.4 12.3 25 206 18.11 26.43 1.5 Jan-15 1.2 1.2 20 20 16.52 20.69 1.3 Feb-15 1.1 2.3 18 39 16.39 18.77 1.1 Mar-15 1.2 3.6 21 60 17.07 22.16 1.3 Apr-15 1.2 4.8 21 81 17.25 21.69 1.3 1 Excludes cash withdrawals from ATMs and at bank counters. 2 Includes Maestro cards. MEMBER CIRCULATION Page 10