November the New December in UK as Internet Drives Christmas Shopping Revolution

From the Payments Council

– Internet retailing comes of age as consumers look to do their Christmas shopping online and earlier with their cards

– £100bn surge in card usage over the last five years* (’06-’10); 97% of the increase was on debit cards

– Cash and cheque usage continues to shrink

– Faster Payments peak again in Q4 as more of us take advantage of speedy transfers

Christmas shopping is getting progressively earlier as shoppers migrate to the internet to buy gifts, according to the Payments Council’s research into the latest spending data.

Plastic card spending on the high street is increasing in November, relative to December. In 2010 this increase was marked; the total amount UK consumers spent with retailers in November (£11.2bn) was over five sixths (84%) of the December total (£13.3bn) [1].  In 2009, November was just 80% of the December total (£13.0bn).  In 2008, it was just over two thirds (69% of December’s £12.7bn) – although the shock of the Lehmans collapse and the start of the recession in the UK would have contributed.

Taking a longer view over the last decade2 confirms this pattern**. At the beginning of this century, November’s spending was nearly 2.5% smaller than December’s, by the middle of the decade spending during the two months was exactly equal and over the last two years November spending has exceeded December by 2.27%.  

However, while we are rushing to use our cards online, particularly at Christmas, we are not using borrowing to fund our shopping habit. Almost all of the increase over the last five years on total card spending was on debit card (£97bn compared with £4bn on credit cards); a pattern that was repeated in 2010, where total spending on cards was up by 7% (9% on debit cards, as opposed to 2% on credit card). Credit card repayments also increased by 8% in 2010 and outstanding credit card credit was at its lowest level since the beginning of 2004.

Cheque usage has fallen by 13% over 2010, as payments have migrated online or to other automated methods; further evidence of our move to the virtual high street. Cash payment volumes have also fallen over the last year by 5% and the number of Faster Payments peaked again in Q4 2010 when 120 million payments benefited from immediate transfer. The majority of these Faster payments were made online.

Sandra Quinn, Director of Communications, Payments Council explained: “The internet has really changed the way we shop at Christmas, with many of us choosing to shop on line to get the best deals and to avoid the shops at the busiest time of year, but you need to start early. That’s why there is a distinct shift in spending towards November.  This has only been possible with the vast expansion of card usage in the UK.

“Even the looming increase in VAT which flattered December’s spending wasn’t enough to mask the rise of November.  The problems of dispatching Christmas goods through the heavy December snows last Christmas mean this year, people are likely to get even more organised and get their orders in online early.  Looks like we’re going to have to learn to love those early Christmas adverts.”

Q4 2010 Statistical Report

ENDS

For further information, contact the press office on 020 3217 8340/8316/8251 or press@ukpayments.org.uk. 

NOTE TO EDITORS

*In 2006 total card spending was £315bn and in 2010 £416bn.

** An average of November and December’s total spending over the last decade

2008 has been excluded

Payments Council

The Payments Council is the organisation that sets strategy for UK payments.  It has been established to ensure that UK payment systems and services meet the need of users, payment service providers and the wider economy. 

The Payments Council has three core objectives:  to have a strategic vision for payments and lead the future development of co-operative payment services in the UK; to ensure payment systems are open, accountable and transparent; and to ensure the operational efficiency, effectiveness and integrity of payment services in the UK. 

The Payments Council is a membership organisation funded by its members, with an independent chairman. It was set up in March 2007 as a membership organisation funded by its members and currently there are 30 members; the Board has 11 banking representatives, four independent Directors and an independent Chairman. The principal UK payment schemes – Bacs, CHAPS and Cheque & Credit Clearing Companies, LINK Scheme as well as the UK Domestic Cheque Guarantee Card Scheme and the Belfast Bankers’ Clearing Company Limited – have entered into a contract with the Payments Council to set out their respective rights and duties towards each other. Under the contract, schemes are required to report regularly to the Payments Council Board: the Board is able to make decisions that are binding on scheme members in order to implement its strategy.  Payments Council also has 18 associate members.

[1] Excluding food and fuel

2 All card spending (ie not just retail)