Cashless kids: digital pocket money and a new customer base for retailers

Leading provider Nimbl, owned by payments firm Caxton, has laid out six years of its card data in a new report. This forms an analysis of more than £33.5m income and spend records of its young users to the value of £250m.

The data demonstrates the growing digital spending power of British children with payment cards. The average outlay per child grew from £164 to £367 between 2017 and 2023. This equates to an 124% increase or 75% in real terms (though pocket money growth has slowed in recent years).

It also shows a cohort of value-oriented young shoppers, with a wide range of interests changing rapidly with age.

Key categories for children’s spending

The number one spending category for kids is gaming, which accounts for a third of all Nimbl spending. Online shopping via Amazon accounts for a further 27.2% showing that digital shopping is a preferred channel for most.

“We’d be fooling ourselves if we thought that children weren’t highly sophisticated shoppers,” says Caxton chief executive Rupert Lee-Browne. “Every penny counts for them, which is probably why Amazon takes such a large proportion of their spend.”

One massive caveat here is that this data covers the pandemic years, with online gaming taking on a rapidly decreasing volume share of overall payments since 2020. Caxton theorises that this might be in part due to a move away from one-off payments for online gaming towards subscription-based models.

It might be surprising that fashion retailers do not feature, but the report team says that a lot of this goes through Amazon, showing that children are potentially relying on their parents for some instore purchases and generally preferring to shop online when in charge of their own payments.

Bricks-and-mortar does get some representation: 12.8% of spend goes to grocery stores, 2.2% to convenience stores and £1 in every £20 spent goes to hobby, toy and game stores.

One of the most striking trends is that the number of categories that children shop across accelerates from 31 at age 14 to 185 at age 15, with new shopping pursuits including beauticians, barbers, record stores and country clubs.

Lee-Browne says that this is largely driven by girls rather than boys. This tends to be because that is the age they are getting into fashion, beauty and other new priorities, he says. Fifteen is also the age at which spending on gaming peaks.

Other lessons for retailers

Children are typically spenders, not savers. Across the years tracked in the data, they spent an average of 88% of the pocket money they received. The share has increased in recent years – reaching 99% in 2023 – meaning they have sadly not taken advantage of the favourable savings rates that have recently been on offer.

That does not mean that children are not smart with their money. “They’re absolutely aware of what they’ve got,” says Lee-Browne, adding that any promotions aimed at children should include clear labelling regarding when it comes to an end.

“They need to be consistent in order to help the children understand: I am saving up for that over a two-week period and I can still get that [the product].”

Another fascinating note is that children’s transactions, much like overall consumer spending, peaks in December. However, the skew towards December here is massive – nearly half of all transactions (48.9%) take place during that month. Another 15% take place in January.

The report authors say part of this is due to children being out and about more in the summer months, meaning gaming is less of a priority and an adult is typically on hand to make purchases for them.