The ongoing challenge of promoting alternative payment methods (APMs) has become even more evident with UK Finance’s latest report on card spending.
Published earlier today, the report reveals that the total value of transactions made using UK-issued cards surpassed £1trn in 2024. This growth was driven by an increase in total transactions, rising from 30.2 billion in 2023 to 31.4 billion the following year.
The number of UK debit and credit cards in circulation also grew, reaching 163.4 million by the end of 2024 – up from 159.7 million the previous year.
Janine Randolph, Head of Data Management at UK Finance, said: “Debit and credit cards continue to be the preferred method of spending for UK consumers. During 2024, we saw just over £1trn worth of transactions by UK cardholders.”
Breaking down this total, UK Finance found that debit card spending reached £797bn, reflecting a slight decline of 0.8% from 2023. Meanwhile, credit card transactions – covering purchases, cash withdrawals, and balance transfers – climbed to £249bn, marking a 5.3% increase from the previous year.
The organisation noted that while the total number of payments has increased, the average payment amount has grown at a slower rate. This suggests that consumers are using card payments for a wider range of smaller purchases, which may have previously been made with cash.
A closer look at the data reveals that the total value of debit and credit card payments has increased by 26%, while the number of transactions on these cards grew by 42%.
UK residents are increasingly relying on contactless payments, according to Innovate Finance. In 2024, there were 18.9 billion contactless transactions – a 3.4% rise from 2023. The average contactless transaction value also grew by 1.7%, reaching £15.86.
Randolph added: “We are using our cards more frequently, particularly making use of contactless transactions, which is being driven by increased card acceptance and also mobile contactless payment.”
An uphill battle for APMs
While these figures may not come as a surprise to experts in the payments sector, the report highlights the uphill battle APMs may potentially face in gaining market share amongst competitors in the UK.
In contrast, APMs, particularly account-to-account payments, have seen significant growth in other parts of the world. Africa, Asia and South America have all experienced rapid adoption, with Brazil leading the way through Pix.
Recent data shows that Pix is now used by around 80% of Brazilian adults, with over 150 million business and customer accounts as of December 2023. The system also set a record of 400 million total transactions last year.
In the UK, as UK Finance’s report confirms, cards remain the dominant payment method. However, regulators, such as the Payment Systems Regulator (PSR) and the Financial Conduct Authority (FCA), have been working to promote the adoption of alternative options.
This push comes amid the continued dominance of Visa and Mastercard, whose growth often reflects an overwhelming feeling of market domination and stifling of innovation – two key concerns for a government focused on economic growth.
The challenge for UK regulators, however, may lie in the fact that consumers don’t feel the need for an alternative.
In regions where APMs have thrived, such as Brazil, they address a pressing issue of high levels of unbanked or underbanked populations. In contrast, the UK’s well-established banking infrastructure means that, for many consumers, there simply isn’t a problem that needs solving.
