Payment using contactless cards boomed as the UK came out of lockdowns and consumers began spending again.
The number of purchases via contactless payment doubled in May compared to the same month in the previous year. And in comparison to May 2019, it was up 50%.
Around 65% of all purchases on debit cards were made using contactless technology.
A lot of retailers have encouraged customers to pay in this way during the pandemic. They hoped that it would protect staff from coming into close contact with shoppers.
The current limit on a contactless transaction is £45, but there are plans to raise the amount to £100.
Increased spending
The gradual relaxation of coronavirus restrictions resulted in renewed spending in shops, restaurants, and entertainment venues. This inevitably led to increased use of credit and debit cards.
According to data from banking trade body UK Finance, there were 1.7 billion debit card transactions in May. This shows an increase of 43% on last May when Covid measures remained tight. For a more balanced comparison, figures from May 2019 are taken into account. 2021 saw a 6% increase on transactions compared to the same month that year. This shows signs that we are returning to a more “normal” level of transactions as society gets back on track.
The total amount spent in May 2021 was £57bn, which is 18% higher than last year and 9% up on the year before.
Over the same period of time, credit card spend also rose. Although the amount owed on credit cards decreased by 8% over the year, signs show an increase in new borrowing.
In the month of May, credit card borrowing outweighed repayments by £491m, which could partly be down to people booking their summer holidays. Shoppers now more than ever often prefer to pay using credit cards because of the extra consumer protection they provide.
However, debt charities warn that some people may find themselves in an unmanageable debt cycle as the government withdraw the additional financial support offered during the Covid crisis.
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