With more and more of us now using credit and debit cards to pay for cheaper, everyday goods, the onus is on businesses of all sizes to take advantage of this trend.
According to statistics released by the UK Cards Association this month, the average transaction value on a payment card has now fallen. Far from a halt in the popularity of debit and credit cards however, this fall can be attributed to a rise in popularity of cheaper purchases using cards – underlining the need for businesses selling low cost goods to start taking card processing more seriously.
Understanding a change in consumer taste
Although the number of purchases we’re making in the UK on credit and debit cards continues to grow, the amount of money we’re spending on them is on the wane.
Data released by the UK Cards Association for June 2014 recently revealed a 9.2 per cent year on year increase in purchases to 993 million in the month. Interestingly however, total spending was down 7.2 per cent, with the average transaction on a payment card falling by £1.40 compared to last year.
|Average debit card transaction: £43.70|
|Average credit card transaction: £60.13|
Despite the overall cost of both figures appearing relatively high, much of the drop in average transaction value is attributed to a rise in purchased of cheaper everyday goods. For many retailers, this serves to underline the growing importance in card processing across all market sectors.
“We’ve seen the average value of a card transaction drop over the last year as consumers increasingly choose to use their cards to pay for smaller purchases,” said Richard Koch, Head of Policy at The UK Cards Association.
“In the retail sector, the average shop is now less than £34 – an increase in small transactions online and the use of contactless cards for lower, everyday sums is partly behind this significant trend.”
So with credit and debit card usage going up, but the average transaction price going down, what does this mean for businesses?
Offering customers a quick solution for convenient goods
For many retailers who trade goods and services with a higher average transaction price than average (£34) this latest news might not change much. But if you’re business offers a range of low-cost goods, it could be time to consider offering more a more convenient method of payment.
From newsagents and grocers, to independent fast-food outlets and sole traders, a failure to accommodate to changing tastes could be impacting on your ability to compete with the competition. With this data suggesting consumers are favouring paying for cheaper goods via card, it’s vital your business adapts to change.
Unlocking the power of contactless payments
One method of payment that’s continuing to grow in popularity is contactless credit and debit card processing. Offering a fast payment method for transactions of £20 without the need for pin or signature authorisation, there are currently over 40.7 million cards in the UK with contactless functionality.
Far from a passing fad, the amount of businesses offering contactless as a payment option is continuing to grow. In the twelve months from March 2013 to March 2014, the UK has welcomed another 30,000 contactless terminals to its high street’s – meaning it’s important your business joins the party before a rival has stolen a march.
Although speed of purchase isn’t likely to play a huge factor in determining the sale of expensive items such as new televisions and appliances, contactless payments can help businesses who sell lower value goods prosper.
If you feel your business might prosper from contactless payment terminals, we can offer you expert guidance to see if they are right for you. For more information, contact one of our friendly team today on 0808 231 4431.