Consumers in the United Kingdom are spending less with credit cards, but they have not abandoned the cards as a desired form of payment, PaymentsSource data show.

“People say credit is dead, but [the data suggest] the opposite,” says Megan Bramlette, managing director at Auriemma Consulting Group (see chart). “The message is, there’s a decrease in spending, but people still need credit cards.”

For both debit and credit cards, sales volume has gone down since 2007, a reflection of an economy in which consumers generally are spending less. Annual credit card sales volume in the UK dropped to $121 billion in 2009 from $165.7 billion two years earlier, while debit card sales dropped to $310.7 billion from $338.9 billion.

The number of credit cards on issue also dropped, to 58.6 million from 67.3 million, as issuers closed card accounts to reduce charge-off exposure, says Bramlette.

More telling is that, while the value of credit card transactions is decreasing, the rate of reduction is only slightly steeper than that of debit card sales, which means consumers are still using credit and have not abandoned the payment vehicle altogether, she says.

Debit card issuance has been relatively flat since 2008, suggesting the UK debit card market is saturated and is having difficulty attracting new debit customers from the unbanked segment, Bramlette.

“To me, this says that the strategies should be that banks focus on existing customers and not on the unbanked,” she says.


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