New data released by UK Finance has revealed that credit and debit card activity in the UK fell slightly in June, despite non-essential shops across the UK re-opening in response to the lifting of restrictions. 933 million transactions were made across the month, a 2.7 per cent decline compared to May, and 43.1 per cent lower than the number of transactions seen in June 2019.
Throughout June, consumers continued their increased use of online retailers, with online card spending accounting for 22 per cent of volumes and 42 per cent of transaction value for the month, compared to 14 per cent and 30 per cent respectively a year earlier.
June also saw the UK’s annual growth rate of outstanding balances on credit cards continue to decline, dropping by 13.4 per cent year-on-year, suggesting customers used the lockdown as an opportunity to pay down credit card bills.
Amid less frequent spending and maintained repayment levels, the total value of credit card transactions rose in June, increasing 22.9 per cent compared to the previous month to £12.2 billion. This could be attributed in part to a willingness to make larger one-off purchases, such as household goods, in response to increasing amounts of time spent at home.
The trend towards increased usage of contactless cards has also continued, with consumers and retailers making use of the higher £45 contactless limit. In June 2020, 55.6 per cent of all payments in the UK were contactless, compared to 42 per cent the year before. These payments totalled £6.5 billion, a 15.5 per cent increase on May, and followed a record month in March, when 56.6 per cent of all payments were contactless.
Eric Leenders, Managing Director of Personal Finance, UK Finance, said “While card activity is still significantly below pre-lockdown levels, there has been steady growth in the value of purchases using payment cards in recent months. Despite non-essential shops re-opening in England in mid-June, there was actually a drop in the number of card transactions in the UK compared to the previous month.”
“Lower spending and maintained repayment levels suggest that customers may have used the opportunity to pay down their credit card bills and reduce any debts – as the annual growth in outstanding balances contracted by 13.4 per cent in the year to June 2020.”
“As shops encouraged customers to pay by contactless card coupled with the contactless limit increase to £45, contactless transactions totalled £6.5 billion in June, a 15.5 per cent increase on May and above the level seen a year ago.”