Credit card statistics you need to know about right now

It’s so important (now more than ever) that we as small business owners stay vigilant and adaptive to the changing trends and preferences of consumers today – in order to keep us competitive and performing at our best. One such transformation that is increasingly shaping the way we conduct transactions is the growing preference for credit card payments over traditional cash transactions. 

In this article, we will delve into the credit card statistics for small businesses in 2024. We’ll emphasise why understanding consumer payment habits is vital and how it can also help you find the best credit card machines for your business.

Credit card vs debit card statistics

On the 1st of September, the ONS released their latest dataset revealing the UK’s consumer spending averages monthly on credit and debit cards. The results are as follows:

The numbers reflect the impact of the COVID-19 pandemic on credit card consumer spending in the UK in 2020. They show a decline in spending during the initial lockdown months, followed by a gradual recovery as restrictions eased. 

The year ended with spending approaching pre-pandemic levels, indicating some degree of resilience and adaptability in consumer behaviour despite the challenging economic environment. 

Here are the trends we can glean from the data:

• Steady pre-pandemic spending: in January and February 2020, the average credit card spending was relatively stable, with figures around £109.37 and £107.18, respectively. This suggests that prior to the COVID-19 pandemic, consumer spending on credit cards was consistent.
• Sharp decline during lockdown: starting in March 2020, there was a significant drop in credit card spending, with the average falling to £94.57. This decline coincided with the implementation of lockdown measures in response to the pandemic, which likely restricted consumer activity.
• Lowest point in April: the lowest point in credit card spending occurred in April 2020, with an average of £57.24. This sharp decrease likely reflects the impact of strict lockdown measures, as many businesses closed temporarily, and consumers reduced discretionary spending.
• Gradual recovery: from May onwards, there was a gradual recovery in credit card spending. Figures for June, July, and August 2020 (79.21, 86.39, and 92.12, respectively) indicate that consumers began to cautiously increase their spending as restrictions eased and businesses reopened.
• Volatility and year-end recovery: credit card spending remained somewhat volatile in the latter half of the year, with fluctuations in October and November (91.77 and 81.93, respectively). However, by December 2020, spending had rebounded to £89.92, suggesting that consumer confidence was recovering by the end of the year.

More recently, July cast a large shadow over the retail sector according to updated ONS sales data regarding summer sales, leaving many retailers reeling after an already tough period of challenges and setbacks, such as the cost of living crisis and the ongoing rises in inflation. Many blamed the dismal sales on the stormy weather.

Credit card vs cash statistics for small business owners

The UK is currently leading the charge with contactless payments.

In addition to a report from takepayments, a report by Lloyds Bank from September 2022 also confirmed that 87% of UK face-to-face payments were contactless: which is quite a jump compared to other leading economies. 

Estimates from Payments Journal suggest that only 45% of Americans use contactless payments in comparison; just half of the uptake of UK shoppers. 

For more info, read: mobile payments have overtaken cash

Credit card usage by country statistics

According to data from Money.co.uk, the worldwide usage of credit cards stands at a staggering 2.8 billion, with 1.06 billion of those being in the United States. When examining credit card ownership per capita: 

• The United Kingdom ranks sixth, with an average of 1.27 credit cards per person. 
• Japan boasts nearly double this figure at 2.34 credit cards per person
• Canada surpasses both with an astonishing threefold average of 3.85 credit cards per person

The borrowing trends on credit cards also reveal significant shifts:

In February 2022, individuals borrowed a net total of £1.5 billion on credit cards, marking the highest monthly amount on record since data collection commenced in 1993. This figure notably exceeded the preceding six-month average of £400 million, contributing to a cumulative net consumer credit of £1.9 billion—the highest level seen in half a decade.

There were a staggering 156 million contactless credit card transactions per month, reflecting a remarkable 109% increase compared to February 2021 and a 23% uptick from February 2020. Despite this surge, contactless payments by credit card have consistently remained below £200 million per month since February 2020.

In the broader global context, the credit card market has exhibited sustained growth. Starting at over $100 billion in 2020, it expanded to $103 billion in 2021 and is projected to reach a remarkable $107.7 billion by 2025, underscoring the enduring significance of credit cards in the world of finance.

Credit card vs debit card: which is best for small businesses?

Both credit cards and debit cards come with their unique advantages and considerations, making it crucial for you as a small business owner to weigh your options carefully.

Credit cards offer a significant degree of financial flexibility. They provide access to a revolving credit line, enabling owners to cover unexpected expenses or invest in growth opportunities, even when cash flow is tight. 

Credit cards also often come with rewards programs, such as cashback or travel miles, which can translate into valuable savings for businesses with frequent expenses. However, it’s essential to exercise discipline to avoid accruing high-interest debt, as interest rates on credit cards can be steep.

On the other hand, debit cards offer simplicity and a direct link to a business’s bank account, helping small businesses maintain tighter control over their finances, as purchases are immediately deducted from available funds only. 

See: Nearly half of UK consumers want to pay for subscriptions with direct debit

However, debit cards may lack the same rewards and benefits that credit cards offer and may not provide the same level of protection against chargebacks, refunds or fraudulent charges. 

Ultimately, the choice between credit and debit cards hinges on a small business’s financial strategy and risk tolerance.

How to accept payment by credit card

Taking payments by credit card has become an integral part of modern business operations. 

To facilitate this process, small businesses should consider several essential steps. 

Setting up a merchant account with a reputable payment processor is the first step. This account acts as a bridge between the business and the credit card networks, enabling seamless transactions. 

Next, businesses should invest in a point-of-sale (POS) system, which allows customers to swipe, dip, or tap their cards securely. It’s crucial to ensure that these systems are equipped with the latest security features to safeguard sensitive customer information.

A great way for you to inform customers of their payment options is to prominently display accepted credit card logos and payment methods in their stores. Integrating an online payment gateway for website and e-commerce operations can expand your business’s reach to a wider customer base. 

All of these steps will streamline the process of accepting credit card payments.

What is a credit card merchant account?

A credit card merchant account serves as an intermediary between the business, the credit card network (e.g., Visa, Mastercard, American Express), and the customer’s issuing bank. 

When a customer makes a purchase using a credit card, the merchant account’s role is to first verify whether the customer’s card is valid and has sufficient funds or credit available to cover the transaction (this typically takes only a few seconds) – route the transaction details to the respective credit card network and the customer’s bank, then finalise the transaction which completes the process.

Merchant accounts come with associated fees, including interchange fees (charged by the credit card networks), credit card processing fees, and possibly additional charges from the payment processor or gateway used. These fees can vary depending on factors such as the type of business, transaction volume, and the specific credit cards accepted.

A credit card merchant account streamlines the payment process, allowing businesses to accept credit card payments and offer secure, convenient payment options.

The future of credit cards for small businesses

The future of credit cards for small businesses is poised for remarkable transformation. 

With rapid advancements in financial technology and changing consumer preferences, small enterprises are expected to soon be able to provide innovative solutions tailored to their customer’s specific needs. 

One prominent trend on the horizon is the integration of artificial intelligence and data analytics into credit card services. Small businesses can anticipate more personalised credit offerings based on their financial profiles and transaction histories, allowing for more strategic and efficient use of credit. 

Blockchain technology is likely to enhance the security and transparency of credit card transactions, reducing the risk of fraud and data breaches.

Additionally, mobile payment options and digital wallets will provide small businesses with flexible and contactless payment solutions, catering to evolving consumer preferences. This shift towards digital payments is also expected to facilitate more efficient accounting and financial management for small business owners.

In conclusion, the future of credit cards for small businesses holds the promise of greater accessibility, security, and convenience. With technology driving these changes, business owners can expect a financial landscape that empowers them to create leaner businesses, streamline payment processes, and meet the ever-evolving demands of their customers.