This June marks 20 years since Barclays first introduced the debit card to British consumers back in 1987, and to celebrate the significant milestone, payment trade association Apacs has compiled a list of statistics relating to the plastic card.
When the debit card was first introduced in the UK, it heralded a significant shift in the way consumers made transactions. Thanks to the debit card, many people cannot remember the last time they had to write a cheque and some retailers no longer even accept them as a valid form of payment.
Beyond paying for goods in shops, restaurants and supermarkets, debit cards also brought about the advent of automated teller machine (ATM) 'hole in the wall' cash withdrawals, not to mention heralding in the cash-back system, and helping the once nascent e-commerce sector become what it is today.
Apacs has calculated that there are now over 41 million debit card holders in the UK, 84 per cent of the entire adult population. In 1987, only 34 per cent of UK adults had any plastic in their wallets, and most of this consisted of credit cards. There are 68 million debit cards in circulation today, compared with just 19 million in 1990, three years after their launch.
In 2006 alone, Brits made 4.5 billion purchases on their debit cards (143 every second), spending a grand total of £194.9 billion, five times the amount spent just ten years earlier. Last year, each person with a debit card used it 166 times on average, making £4,799 worth of purchases and withdrawing £3,848 in cash.
Jenna Smith, head of PR at Apacs, commented on the 20th anniversary celebrations: "It's hard now for most of us to remember what life was like before the debit card, as it's become one of those things we're unlikely to leave home without. Before 1987, most of us were totally reliant on cash or cheques, and although credit cards were used in supermarkets at that time, they only made up six per cent of transactions.
"Today, cards amount for 66 per cent of supermarket spending, and most of this is on debit cards," she continued. "In fact, over a third of all debit card transactions are made at the checkout."
Bright future
Apacs goes on to estimate that spending on debit cards will double by 2016, to over £400 billion, due in part to the introduction of 'contactless' payments technology, which could remove much of the need for consumers to carry small change. Analysts are already predicting advancements as 'sci-fi' as voice recognition in the debit card's future.
With more credit cards introducing annual fees, experts are expecting the practice to once again become 'the norm' within three years; financial research company Defaqto has gone as far as to suggest that debit cards could be boosted by a mass exodus of casual credit card users, stung by fees.
Commenting on the growing number of credit card providers implementing fees, David Black, head of banking at Defaqto, predicted: "This will herald a significant contraction in the market size as people who clear their outstanding credit card balances on a monthly basis will, as they start facing annual fees, jettison credit cards in favour of using debit cards instead."
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