2001 doesn’t seem very long ago, but what we buy and the way we pay for it has changed enormously over the last decade. In its latest report, The Way We Pay, the Payments Council brings together all the big trends over that period for the first time.
Despite the doom and gloom of the economic crisis in the last few years, the British have been spending a lot more. “Entertainment spending has risen by over 60%, outstripping the growth in consumer spending by over a quarter. We have doubled our spending in restaurants and cafés (+102%), and increased our spending on cinema and shows by 63%. Pubs and bars have lost out in real terms, though. We are spending just 7% more on going out for a drink. In total, we spent £58bn having fun last year, almost one and a half times as much as we forked out for gas and electricity (£34bn),” the report indicates.
In terms of what kinds of payments are being used, there has been a big shift. Cash usage has dropped dramatically and cheques are beginning to be a thing of the past. For example in 2001, an astonishing 40% of home rental payments were made in cash and 43% of retail spending by value used notes and coins too. By 2011, landlords collected only just over a quarter of rents in cash, while only 30% of shopping was paid for in this way (with the majority of payments being under £5).
The rise of the debit card has been responsible for the decline of cash on the high street – indeed debit card spending has risen almost fourfold since 2001- while Direct Debits have completely changed the way Britons make their regular payments.
The British still rely on cash for small cash transactions (three out of five payments) ut since 91% are under £25, contactless payment technology which has started to become a more familiar sight at shop tills and on our cards could revolutionise how way they pay, the report highlights. Currently, most contactless payments are made using a debit or credit card upgraded with the new technology, but soon mobile phones could do the job instead. By 2021, consumer spending is forecast to be roughly 45% higher, but the use of cash is expected to have fallen 1%, and cards may be in decline by then too.
Adrian Kamellard, Chief Executive of the Payments Council commented on the ten year change: “We scarcely notice the steady changes in the way we pay, yet someone in their thirties today will see more change in their lifetime than in the entire history of money. Even recent innovations such as payment via a mobile phone, which ten years ago some felt to be science fiction, will soon be commonplace. The 2000s were the decade of the debit card. 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.”
The UK sure is one of Europe’s pioneers when it comes to payments technology. However, we might still need to wait a few more years to see the disappearance of cash and the rise of mobile payments.