The number of transactions made by card is growing at the fastest rate since 2008, renewing predictions that the UK will soon be all but cash-free.
The volume of card transactions increased by 12.3 per cent in the year to June, illustrating the nation’s shift from cash and cheque to plastic and mobile.
But the news has caused concern on several fronts. First, the Bank of England is concerned about ballooning consumer debt, especially at a time of rising inflation and collapsing wage growth.
Payments made on credit or charge cards grew 9.3 per cent over the year, compounding fears that Brits are relying ever more heavily on borrowing.
The Bank of England has already forced lenders to take precautions against potential bad debt. Earlier this year it asked banks to set aside an extra £11.4 billion to cover a further increase in borrowing and the risk of default.
Outstanding credit card debt stood at £68.5 billion at the end of June, up by £900 million in just one month.
Meanwhile, business groups have warned that small firms are at risk from new rules on card payments.
As Simply Business reported, the government announced last month that it is set to ban surcharges for credit and debit card use. Small businesses have voiced concern about the move, which it is thought could particularly impact small retailers.
The government claims that banning these surcharges will save consumers around £473 million a year, but many commentators believe that the cost of processing card transactions will simply be passed on through higher prices.
MoneySavingExpert managing editor Guy Anker said: “We expect some companies will raise prices for all to compensate for the loss, which could hit those who currently pay in cash.”
The ban is set to come into force from January 2018.
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22 June 2020 • 9-minute read
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