Contactless world but credit card spending drops

Contactless world but credit card spending drops

Spending across the 2019 summer season saw a decline in credit card spending by Irish consumers.

At the same time, debit card spending rose by the same percentage, demonstrating that consumers are using their own money rather than adding to their debts.

Data released by payment services company, New Payment Innovation, based on transaction data, has seen the decline in credit card spending balanced by debit card spending for the same time period — an indication that Irish consumers are being cautious about their spending habits.

The figures reveal that 35% of transactions made this year were using credit, compared to 37% last year. The majority of the remaining transactions were made using debit cards at 64%.

“A decline in credit card spending is not just linked to a rainy summer,” said Carl Churchill, managing director, New Payment Innovation.

“The potential impact of Brexit on the Irish economy seems to be one of the major concerns of consumers.

"With a subsequent shift in the user behaviour towards being more cautious about their spending habits, their conscious effort to reduce their household debt will also lead to a drop-in credit card spends.

Average transaction values are also on the decline which demonstrates the increased popularity of contactless cards which further drives an increase in debit card spending instead of cash for low value transactions.

A further interesting trend identified through the research is the increasing use of cards to purchase small ticket items.

Average transaction value of purchases across all card types dropped from €60.82 to €54.27 in the same time period — a trend signalling how Irish consumers are increasingly using contactless cards and mobile payment options, with cards replacing cash even for small value purchase items.

When it comes to more expensive items, credit cards were still the preferred mode of payment favoured for higher ticket purchases with an average transaction value of €89.97, compared to debit card which was less than half at €44.36.

A New Payment Innovation blog notes that for decades analysts have been predicting the advent of the cashless society, “but like flying cars and time-travel, that future never seemed to get here – until now.”

With a variety of options including credit and debit cards, online payment systems, peer-to-peer networking, smartphone apps and more, it has never been easier to embrace the cashless way of life.

The advantages include: the expectation by customers that all businesses now accept cards; going cashless requires less security, monitoring and time; and transactions are automatically recorded, stored electronically and can be synced with bookkeeping software to make it an easier, faster process.

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