Cards have overtaken cash as the UK’s most frequently used payment method thanks to the rise in contactless cards, according to UK Finance
UK Finance released its 2018 Payment Markets report that revealed the effect contactless payments, online shopping and smartphones have had on how consumers manage their finances.
According to the report, new technology, payment innovation and changing consumer habits contributed to 13.2 billion card payments at the end of 2017 overtaking cash payments (13.1 billion) for the first time.
Tap and go technology has paved the way for a mobile payments revolution. The popularity of contactless payments among UK consumers is a key driver of debit card growth. In total, across both debit and credit cards, the number of contactless payments increased by 97% during 2017 to 5.6 billion. Almost two thirds (63%) of people in the UK now use contactless payments, and no age group or region falls below 50% usage.
Furthermore, not only is card growth significant among consumers, but small businesses across the board are becoming ever more comfortable with the speed and ease of making low-value payments and that has made the use of debit cards more popular.
By the end of 2017 there were nearly 119 million contactless cards in circulation and, with customers and businesses increasingly choosing to use contactless cards, it is anticipated 36% of all payments across the UK will be contactless in 2027.
The report also noted that in 2017, there was a 15% decrease in cash payments, coming to 13.1 billion payments overall. A staggering 3.4 million consumers almost never used cash at all, relying on other digital payment methods.
However, although the report findings showed that cards have surpassed cash, it is still the second most frequently used payment method. Cash accounted for just over one-third (34%) of all payments in 2017. Around 2.2 million customers mainly used cash for their day-to-day shopping in 2017, although nine out of ten of them had a debit card they could use if they chose, and the majority used other payment methods to pay their regular bills.
Although there is a rapid rise in digital payment methods, the report predicts that by 2027, cash will still hold second place behind debit cards.
Stephen Jones, chief executive of UK Finance said: “The choice of payment options available in the UK is allowing people to choose to pay the way that best suits them. But we’re far from becoming a cash-free society and despite the UK transforming to an economy where cash is less important than it once was, it will remain a payment method that continues to be valued and preferred by many.
“These trends are likely to shift further over the next decade. Developments such as Open Banking are expected to bring extensive changes to the payments landscape, something that will likely shape how we interact with our money in the coming years.”
Other key findings included:
- The average adult in the UK made 54 payments per month during 2017. Of these, 20 payments were by debit card with another 20 made by cash. The average adult also made nine contactless payments per month in 2017.
- By 2027 the average adult in the UK is forecasted to make a similar number of payments each month however the frequency of using certain payment methods will change. 28 of these payments will be made using debit cards, with cash being used 12 times each month. The average adult will also make 22 contactless payments per month in 2027.
- The number of cash payments in the UK is expected to continue to fall over the next decade, as consumers turn to alternative payment methods, most notably debit cards. There are expected to be 6.4 billion cash payments in the UK in 2027, accounting for 16 per cent of all payments.
Young consumers, aged between 25 and 34, were most likely to make contactless payments. Those who moved away from cash entirely were also most likely to be among this age group.
Adam Herson, business development director at Barclaycard Mobile Payments, highlighted:
“It’s not surprising that cards have replaced cash as the most common form of payment. In particular, contactless payments have become the de facto payment type of choice for millions of consumers. These are now used across transport systems and by the vast majority of retailers – and shoppers love them because of the speed, ease and convenience that they bring.
“More recently, we have seen a surge in the use of wearable and mobile payments, creating new, exciting opportunities for both shoppers and brands. Consumers are increasingly able to match their payment accessory or device to their lifestyle or fashion taste.”