Debit cards will overtake cash to become the UK’s most frequently used payment method by 2021, according to a new report from Payments UK, the trade association for the payments industry.
The new report, UK Payment Markets 2016, revealed that consumers and businesses made more than 72,000 payments in the UK every minute in 2015 – totalling over 38 billion payments. This will go up to 79,044 payments every minute (or 42 billion in the year) by 2025.
In 2015, cash accounted for nearly half (45.1%) of all payments. However it is predicted that notes and coins will drop to being used for just over one in four (27%) payments by 2025.
The report added that tipping point for the most popular payment method will be reached in 2021 when 14.5 billion debit card payments are predicted, overtaking the forecast 13 billion cash payments for the first time.
Using analysis of existing payment data, technological and behavioural trends Payments UK also forecast that credit, debit and charge cards will account for more than half of all payments made (50.2%) in 2025 – driven in large part by the increasing popularity of contactless.
The average UK adult made 20 card payments per month in 2015, of which around one in 10 were contactless. By 2025 Britons are predicted to use a debit, credit or charge card virtually every day and almost half of these transactions will be contactless, the report said.
Payments UK chief economist Adrian Buckle said: "Technology, consumer choices, business behaviour and market developments are major factors in how we choose to pay, and will have a major impact on how things change over the next ten years.
"This year’s UK Payment Markets report reveals a picture of consumers and businesses more ready than ever to reassess how they make payments and make the most of the convenient, cost effective and innovative options that are available."
Over 85% current account holders used Direct Debits in 2015, and 3.9 billion payments were made by Direct Debit in the UK, worth a total of £1,215 billion. Limited growth is expected over the next 10 years, with 4.3 billion payments forecast in 2025.
The report added that 13% fewer cheques were written in 2015 compared to 2014, but this still resulted in more than 546 million cheque payments in the year.
In value terms, the CHAPS payment scheme, which is used primarily for wholesale financial and corporate treasury payments, accounted for £68.4 trillion – or more than 90% of the total value across all payment types.