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Shoppers increasingly paying by plastic for smaller purchases: new study

UK shoppers are increasingly using plastic to pay for items which were once purchased with five or ten pound notes, new research for Debenhams Personal Finance has revealed.

GENERAL MERCHANDISE

Shoppers increasingly paying by plastic for smaller purchases: new study

The study found that cards rather than cash are often handed over for coffees and snacks in local cafes, sandwich bars and pubs. A similar picture was revealed in newsagents and sweet shops where the purchase of magazines and confectionery is now frequently made with plastic. 

Debenhams looked at latest industry figures for spending by card in high street outlets where previously the bill would be settled with a handful of small change.

The number of transactions using credit and debit cards was found to have risen by almost 40% from 7.4 billion in 2008 to 10.2 billion this year, but the value of the average transaction by credit and debit card had dropped.

The Debenhams survey found that the trend is being led by younger adults who enjoy the convenience of plastic in their everyday spending for everything from a skinny latte to a glossy magazine. 

Almost one in three (31%) 18-35 year olds said they used a credit or debit card for purchases under £10 at least once a week and 19% said they used plastic for purchases of £5 or under. 

The study revealed that the top ten items purchased by card which cost £5 or under included a coffee in the number one slot, followed by chocolate, sweets, crisps, and soft drinks. Newspapers, magazines, a pint of milk and a loaf of bread also made the list. 

Those under 35 told researchers the main reasons for using a card was “convenience” and “not having to carry cash”. Some of the respondents also said they were channelling their use of cards to certain providers who offered cash-back and loyalty schemes.

However, not all took card convenience for granted, with 7% of those that regularly used a card for purchases under a fiver admitting that they frequently checked with the cashier in a shop if it was OK to do so. Some said they apologised for the transaction being so small. 

The older generation was found to still prefer cash as means of keeping a check on their finances, although they used cards for larger less frequent purchases. Only 5% of over 55 year olds said they preferred plastic to cash for small value treats. 

Debenhams head of personal finance Mike Hazell said: “Cash is still a big part of our lives, but for an increasing number of people, in particular the younger generation who have grown up with cards, plastic is the payment method of choice, even for relatively small, everyday purchases. 

“They like the convenience and the benefit that some cards have of reward schemes. Others just don’t like carrying cash. It’s all down to personal choice.” 

Debenhams said the changing attitude to cards was reflected in statistics showing frequent transactions for smaller amounts are now often put on plastic. In coffee shops, the total spend on plastic was found to be up by 9%, but the average payment made by debit card had dropped to £8.48, compared to £11.20 a year ago. 

In pubs, the debit card was found to be more likely to out when the bill came to just over £20 with the average debit card payment being £22.78. A year ago a typical debit card transaction was £24.58.

The picture was found to be the same in restaurants where overall spending on cards had risen by 12% with credit cards more likely to be used when the meal came to an average £36.77 compared to £39.14 a year ago.

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