Debit card spending rises over summer as credit card use falls

Irish consumers continue to favour debit cards over credit cards, according to a new analysis of spending patterns.

There has been an increase in the use of cards for low-value transactions, with the ease of contactless payments driving a change in habits for many consumers. When it comes to big-ticket items, though, people still turn to their credit cards.

Over the summer, there was a decline in credit card spending. For the same period, debit card spending rose, indicating that consumers prefer to use their own money rather than adding to their debts.

Data released by payment services company New Payment Innovation based on transaction data indicates that credit card spending in Ireland has seen a decline of 2% compared to the same period last year. Credit cards account for 35% of all card spending.

Debit card spending for the same time period increased by 2%, signalling that Irish consumers are being cautious about their spending habits and avoiding getting into debt.

The majority (64%) of card transactions were made using debit cards — showing that more Irish consumers are now using debit cards to make purchases.

Among the patterns to emerge in New Payment Innovation's research is the increased use of cards to buy small-ticket items as customers abandon cash for plastic.

The prominence of contactless and mobile payment options means that many people are now using these instead of carrying cash.

The average transaction value of purchases across all card types dropped from €60.82 to €54.27.

This new data matches trends previously identified by the Banking & Payments Federation Ireland (BPFI) which, earlier this year, indicated that consumers were flocking in their droves to contactless payments.

One million contactless transactions were completed per day last year. The value and volume of contactless payments grew by almost 60% as the year went on.

Despite the prominence of contactless, New Payment Innovation said that when it comes to more expensive items, credit cards are still the preferred mode of payment. Credit cards are favoured for higher ticket purchases with an average transaction value of €89.97 this summer, compared to debit card which was less than half at €44.36.

Carl Churchill, managing director of New Payment Innovation Ireland, said consumers are becoming more savvy and more cautious when it comes to spending: "A decline in credit card spending is not just linked to a rainy summer this season. 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."