Two Decades Of Debit Cards

Twenty years ago, Barclays launched the UK's first debit card, Connect. Nowadays, we can't live without our delightful debit cards!

Twenty years ago, on 3 June 1987, Barclays forever changed the face of British banking by launching the Connect Card -- the UK's first debit card. As I pointed out in The World Of Fantastic Plastic, Barclays also launched the UK's first credit card, Barclaycard, on 29 June 1966, so this was Barclays' second major revolution in the world of plastic cards.

Debit cards proved instantly popular with the British public, because they enabled customers to leave their chequebooks at home, yet they could still make payments and withdraw cash from their current accounts anywhere in the world. (Remember the bad old days when you could raise a family in the time it took the person in front to write a cheque? Groan!)

Given their convenience and ease of use for both consumers and retailers, debit cards caught on immediately. Within nine months of launch, Barclays had issued over a million Connect Cards. Naturally, other banks rushed to follow Barclays' lead and, by 1990, there were nineteen million debit cards in circulation.

These days, there are 68 million debit cards in circulation in the UK, and 41 million of the UK's 48 million adults have at least one. In 2006, we Brits made 4½ billion purchases using our debit cards, spending a total of £195 billion. Thus, on average, there are 143 debit-card purchases each and every second of the year, and a typical debit-card user spends close to £4,800 a year.

What's more, debit cards are now more popular than credit cards: six in seven adults (85%) have at least one debit card, versus the two in three adults (66%) who possess one or more credit cards. Indeed, debit cards are so ever-present that they are now more popular than cash in certain sectors. For example, spending in retailers is greater on debit cards than any other form of payment.

Of course, even after these two huge leaps forward, plastic cards continue to evolve -- most recently, with the roll-out of Chip and PIN. Also, the popularity of prepaid debit cards is growing; a prepaid card allows a customer to load a positive balance onto a card before going shopping or heading abroad. In addition, the introduction of 'wave and pay' or 'contactless' technology will enable us to make small purchases simply by waving a plastic card in front of a terminal (as per London's Oyster travelcard payment system).

I'll leave you with one final thought. Which are better: credit cards or debit cards? In my view, both have their strengths and weaknesses, therefore, it's very much 'horses for courses'. However, as I revealed in Credit Cards Versus Debit Cards, I never use my credit cards to withdraw cash, but I always use them to pay make purchases and buy online, in order to enjoy enhanced legal protection. Hence, my advice would be to carry at least one of each, but use all plastic cards wisely and avoid spending more than you can comfortably afford to repay!

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