Coronavirus: Britons are shunning credit in favour of debit payments

Saleha Riaz
·3 min read
The strongest preference for debit is among younger consumers. Photo: Getty Images
The strongest preference for debit is among younger consumers. Photo: Getty Images

The majority of UK shoppers now prefer to pay via debit than credit as they believe it gives them more control over spending, new data revealed.

A study of 10,000 consumers and 1,000 merchants commissioned by payments platform Trustly found that 71% UK shoppers prefer to pay via debit, compared to 25% who prefer credit.

When asked why, more than half (52%) said they prefer to be in control of their spending, while 48% said they do not like the feeling of being in debt.

“Before the pandemic there was a shift away from credit but this has now accelerated,” said William McMullan, Trustly’s director of ecommerce.

“An uncertain economy has created a bigger appetite for debit options, particularly among young people, who want to steer clear of unnecessary debt,” he explained, adding that research shows convenience is a big driver for debit payments.

McMullan expects this trend to say.

The report showed the strongest preference for debit is among younger consumers.

As many as 78% of 25 to 35-year-olds said they prefer debit compared to 16% who prefer to use credit cards and buy-now-pay-later credit options – the highest proportion of any age group, closely followed by 16 to 24-year-olds (76%)

The least likely group to prefer debit was 66 to 75-year-olds (54%).

This strong preference for debit is reflected in recent transactions. When asked how they paid online in the last three months, 86% said they had used debit – compared to just 40% who had used credit options, including buy-now-pay-later.

READ MORE: Brits facing up to £2.3bn 'buy-now pay-later' Christmas bills

The preference for debit is not confined to shoppers. The majority of UK merchants (79%) said that variable card scheme fees create uncertainty and are an issue to deal with.

More than three-quarters said they have low negotiating power with card schemes and are not in full control of their costs, with 58% feeling the cost structure of card schemes is difficult to understand.

The survey also provided evidence that UK consumers are edging towards technology that might make online shopping even more convenient.

Overall, one in ten respondents said they preferred to authenticate their online identity via fingerprint or face ID. But this preference rose to one in four (25%) for consumers under the age of 25, “indicating a possible shift in future shopping and payment behaviour.”

Meanwhile, it was reported last month that Brits facing up to £2.3bn ($3.1bn) in bills for Christmas shopping bought on buy-now pay-later schemes.

Research showed one in four people (26%) used buy-now pay-later services to fund Christmas in 2020, the research found.

Buy-now pay-later scheme users now face an average bill of £170. With Brits spending an average £438 on their Christmas shopping, this amounts to nearly 40% of their total Christmas spending.

And around eight in 10 UK adults will carry debt into 2021, with the most common reason for holding debt in 2020 being “normal living expenses.”

That’s according to a study by financial comparison experts Money.co.uk. This is despite the fact that the average amount owed has reduced by around a third compared with the previous year, according to the research.

WATCH: How to prevent getting into debt