June 01 2007

Happy Birthday to online banking and the debit card

Online banking in the UK celebrated its 10th anniversary this week (27 May) and Sunday marks 20 years of the debit card (introduced by Barclays in 1987).

Some facts about debit cards:

There are 41 million debit card holders in the UK (84 per cent of the adult population).

There are 68 million debit cards in circulation.

4.5 billion purchases were made in 2006 - the equivalent of 143 purchases every second - and £194.9 billion was spent on debit cards (equal to five times the amount spent in 1996).

In 2006, each of us with a debit card used it 166 times on average - making £4,799 worth of purchases and acquiring £3,848 in cash.

By 2016, spending on debit cards will have doubled to over £400 billion. We'll have new technologies like contactless payments, and UK payments association APACS predicts that by 2011 personal spending on debit cards will have overtaken cash.

Online banking Over the last ten years online banking has become increasingly popular and the number of people using the service has risen five fold in the last six years, according to APACS. In 2006 there were a record 18.1 million Britons banking online and for the first time the number of adults using internet banking exceeded those using telephone banking. Today, half of all internet users in the UK bank online.

Those with online accounts are also accessing them more frequently - with one in five users going online daily compared to just one in thirteen four years ago. 90% of online banking users also shop online - with 84% of those using their online bank account to make payments or transfers. By 2016 it is expected that over two thirds of all adults will be using telephone and internet banking.

Sandra Quinn, Director of Communications at APACS, said: "Online banking has totally changed the way we manage our accounts, enabling us to keep a much closer eye on our finances outside of traditional banking hours. The ease and convenience of online banking has meant it has become second nature to many of us. Looking ahead, we are expecting more people to start logging on for their banking, with many more using it for making payments rather than just checking balances: a shift that will no doubt be accelerated by the banking industry's new faster payments system which will speed up online payments after its launch later this year."

In May 2005, the UK banks announced plans to develop a new infrastructure to speed up internet, phone and standing order payments by the end of 2007. It's said that this massive project will revolutionise the UK's automated payments infrastructure.

The new system will enable customers to use the internet or phone to make a payment that will reach the recipient's bank account within a few hours. LINK (the UK cash machine network provider) and Voca are the suppliers who will jointly develop and provide the new payment system. Abbey, Alliance & Leicester, Barclays, Co-op, HBOS, HSBC, LloydsTSB, NAG, Nationwide, Northern Rock and Royal Bank of Scotland Group have all committed to this Fast Payment System.

Emma Herrod