Online Card Spending
2014 - 2016
1. Introduction
Figures in this report are based on data reported to The UK Cards Association by UK merchant acquirers and covers card spending
within the UK made by consumers, businesses, the Government and overseas visitors. The figures do not include card payments made
to those online retailers who process their transactions overseas. In this report, online spending (e-commerce) covers card payments
made via the internet through devices such as PC, tablet, smartphone etc.
In just over two decades the internet has become an indispensable part of everyday life. A growing number of
consumers and businesses go online for shopping, banking, information and entertainment as online services tend
to be less time consuming, more convenient and often cheaper to use.
According to the Office for National Statistics, around 77% of adults bought goods or services online in 2016, up
from 53% in 2008. Shopping on the go using mobile devices is also becoming increasingly common with over half
of UK online sales made via smartphones and tablet devices in 2016, up from 26% in 2013. Recent figures indicate
that smartphones in particular are behind this current trend.
Exponential growth of online shopping (e-commerce) has been driven by strong consumer and business demand
and the increasing number and type of goods and services available. The public increasingly expects to access
services quickly and conveniently, at times and in ways that suit them.
In order to stay competitive, to keep up with the changing consumer preferences as well as to attract new buyers,
many merchants and industry stakeholders have been investing in innovations in the digital space offering
enhanced security, choice, convenience and consumer protection for online card payments.
2. E-commerce – key statistics
 In December 2016 online spending accounted for
26% of total card expenditure, up from 22% in
December 2014.
 The number of card purchases made via the internet
represented 12% of total card purchases, up from
11% two years ago.
 Over the last two years e-commerce grew nearly
twice as fast as total card expenditure: 42%
compared to 23% for volumes, and 28% compared to
13% for values.
 1.8 billion
E-commerce purchases and spending
168
15
124
13
102
11
80
Online Card Spending. 2014 - 2016
Jun 15
Dec 15
Jun 16
9
Dec 16
Value £ billions
Volume millions
respectively.
Value
146
Dec 14
worth
these figures stood at 1.3 billion and £120 billion
17
Jun 14
purchases
£154 billion were made in 2016. Two years ago
January 2014 to December 2016
Volume
e-commerce
 During 2016 an additional 1.7 billion e-commerce
purchases were made worth £44 billion at online
retailers who process their transactions overseas
(such as Amazon, Google, iTunes and others).
These figures are excluded from the above totals
and associated analysis.
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3. Spending online by merchant sectors
 Shopping patterns differ considerably when comparing spending via the internet to that in-store. It is more
likely that consumers will visit a store for groceries, while music and films are mostly purchased digitally.
 Just above a quarter of all e-commerce purchases (26%) are made on entertainment such as cinema and
concert tickets, takeaway orders and digital content (e.g. apps, books, games, music).
 The mixed business sector also features strongly, accounting for just over a fifth of all purchases made online,
mainly driven by catalogues and department stores. In comparison, only 6% of all in-store purchases are made
in this sector.
 The most popular high street destinations are merchants selling food and drink (including supermarkets and
off-licences), accounting for 41% of face-to-face purchases, while in the digital space groceries make up only
7% of purchases.
Proportion of card payments made in-store and online, by merchant sectors, by volume
41%
Food & Drink
7%
Other Retail
9%
Mixed Business
Household
20%
2%
10%
Clothing
7%
6%
5%
Hotels
1% 7%
5% 1% 5% 1% 6%
Travel
Financial Services
5%
21%
Other Services
15%
Entertainment
26%
 The food and drink sector accounts for a quarter of all card spending made in-store, compared to 6% for
spending made via the internet.
 The highest proportion of online spending by value is registered in the financial services sector, totalling 27%.
Only 5% of online payments are made in this sector.
 Other services account for 25% of e-commerce spending, mainly driven by government services (such as
council tax or DVLA) and educational establishments (such as tuition fees).
 As virtually all spending on automotive fuels and vehicle sales and services occurs in the face-to-face
environment these sectors are excluded from comparisons in this section.
Proportion of card spending in-store and online, by merchant sectors, by value
25%
Food & Drink
6%
7%
Online Card Spending. 2014 - 2016
9%
Other Retail
6%
5%
Mixed Business
4% 4% 1%
Household
13%
10%
Clothing
5%
4%
Hotels
27%
7%
Travel
9%
Financial Services
15%
Other Services
25%
11%
Entertainment
7%
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Online spending share within merchant sectors
 Online shopping dominates within the services sector where 32% of total card spending and 19% of purchases
are made via the internet, while within the retail sector 13% of spending and 9% of purchases are online.
 The highest proportion of e-commerce is registered within financial services where half of all spending is made
via the internet, mainly owing to online banking services and insurance.
 Other services (38%) and travel (37%) were the other sub-sectors with pronounced e-commerce shares, driven
by spending on government services, education and airlines respectively.
 In contrast, the online market for buying groceries was comparatively smaller – only 7% of total food and drink
spending occurred via the internet.
Merchants with the highest and lowest proportion of online spending
Highest merchant categories
Online share
Lowest merchant categories
Online share
Catalogues
92%
Pawn shops
1.4%
Digital entertainment
80%
Laundry & cleaning
1.7%
Timeshares
75%
Public houses
1.8%
Wire transfer money order
74%
Veterinary services
1.9%
Security brokers and dealers
70%
Bakers & dairies
1.9%
Government services
68%
Employment agencies
2.1%
Concerts & entertainers
67%
Funeral services
2.2%
Computer programming
66%
Auto repair shops
2.6%
Cinema, theatre & dance
61%
Wrecking & salvage yards
2.9%
Gambling
59%
Luggage & leather goods
3.3%
 When drilling down within the merchant categories, catalogues registered the highest online spending share of
92%, followed by digital entertainment (80%) and timeshares (75%).
 Similar to the vehicle sales & services sector and automotive fuels where virtually all spending takes place in
the face-to-face environment, the data also shows that for some types of merchants in-store shopping still
dominates, such as at laundry and cleaning, pubs and veterinary services, where online spending accounted
for just below 2%.
Online Card Spending. 2014 - 2016
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4. Average transaction values
 While the majority of card purchases still take place in the
face-to-face environment, the value of purchases made online
tends to be higher.
 The average transaction value (ATV) for e-commerce
purchases (£85) is more than double the ATV for in-store
purchases (£38).
 The number of e-commerce purchases has been growing at a
faster rate than spending, resulting in a substantial decrease
(£9) in the ATV, falling from £94 in 2014 to £85 in 2016.
 Although debit cards account for 77% of card payments in the face-to-face environment, in the digital space
this proportion is 58%. Greater consumer preference to use credit cards for internet shopping can, in part, be
linked to additional payment protection under Section 75 of the Consumer Credit Act 1974. However, by value
the proportion of online debit card spending is higher compared to the face-to-face environment, with both
above 70%.
 This difference is evident in the ATVs, with the ATV for debit card purchases online amounting to £102 as
opposed to £60 for internet spending on credit cards.
 The ATV for retail spending online amounted to £47 while the average value of online purchases in the services
sector was £117.
 Vehicle sales and services was the only merchant category where the average in-store transaction value (£194)
was considerably higher than that made via the internet (£80). Mixed business merchants registered a slightly
higher transaction values in the face-to-face environment (£33) in comparison to online sales (£24). In contrast,
all other merchant sectors recorded higher ATVs on digital sales.
Comparison of face-to-face and online ATVs by merchant sectors
£450
£402
ATV in-store
ATV online
£360
£299
£270
£194
£179
£173
£180
£153
£133
£123
£90
£80
£85
£65
£54
£39
£50
£69
£62
£36
£33
£24
£28
£64
£22
£19 £23
£0
Online Card Spending. 2014 - 2016
5
5. Industry developments
There have been a number of innovations in the e-commerce space by card issuers,
schemes, merchants, merchant acquirers and third party payment service providers,
offering enhanced security, choice, convenience and consumer protection. These
innovations range from technological solutions such as digital wallets, e-money accounts
and tokenisation, to those based on convenience such as ‘one touch’ payment confirmation
via retailer websites or links on popular social media sites. Marketing initiatives such as
Black Friday and Cyber Monday, as well as those by individual retailers, have also been
significant in the promotion of the digital channel.
Other factors driving online spending have been omni-channel merchants (high street
merchants with online platforms) offering services such as ‘click and collect’ and collection
lockers, which are secure lockers located at convenient locations such as train stations,
business centres and supermarkets.
A recent development, and an area of growing importance to card payments, is the increasing manifestation of
messaging formats (such as WhatsApp, SMS, Facebook Messenger) being fused with more established payment
types. These enable the user to send payments through messaging apps on their mobile devices.
Specialist online retailers and multisided platforms (such as AirBnB, eBay and Open Table) are also driving up
traffic, having significantly increased their presence in the market in recent years. These platforms form part of the
emerging ‘sharing economy’ space. Merchants in this area are typically hosted on mobile phone apps with
payments funded through embedded ‘in-app’ digital wallets, mostly linked to payment cards.
New payment service providers (such as Braintree, Ayden and Stripe) which offer open platforms and fully
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serviceable APIs are also growing in importance. These new online acquirers are enabling new businesses to
emerge and build next generation products and services by making the process of paying online far more
seamless, rather than the traditional online form used by many retailers.
In future, card payments will increasingly become a deeply embedded feature in online payments, with the growth
in tokenisation in particular leading to the underlying card payments system being used in new and
innovative ways.
Most popular e-commerce shopping sites in the UK*
Website
Category
Website
Category
ebay.co.uk
General merchandise
ikea.com
Furniture
amazon.co.uk
General merchandise
boots.com
Health and beauty
argos.co.uk
General merchandise
diy.com
Home and garden
next.co.uk
Clothing
newlook.com
Clothing
asos.com
Clothing
debenhams.com
General merchandise
johnlewis.com
General merchandise
currys.co.uk
Consumer electronics
marksandspencer.com
General merchandise
aliexpress.com
General merchandise
*Source: SimilarWeb Ltd.
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API – the abbreviation of application program interface – a set of routines, protocols, and tools for building software applications. The API specifies how software
components should interact and APIs are used when programming graphical user interface components.
Online Card Spending. 2014 - 2016
6
6. International comparisons
E-commerce is the fastest growing retail market worldwide, it has become an important tool for small and large
businesses, not only to sell to customers, but also to engage them. Globally, online markets are very different in
terms of maturity. North America and Europe are mostly mature e-commerce markets, which are evolving and
changing constantly, while South America and Asia markets are developing very dynamically, albeit from a much
lower base.
UK leads the way in Europe with the largest e-commerce market and, globally, with the highest online spending
per household. In terms of total value of online sales, the UK ranks as the third largest economy following China
and the United States.
Average online spending per household worldwide 2015*
(US$ thousands)
*Source: GlobalData, Online Consumer Payments Analytics Survey
Online Card Spending. 2014 - 2016
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