Card overtakes cash transactions in UK

The so called 'cashless society' could kick in sooner rather than later, new figures suggest, after more than 3 million people revealed they 'hardly' used the legacy method to make payments last year.

In the year to December, debit cards overtook cash as the most frequent payment method for the first time in the UK, a move attributed to the rise in contactless, online shopping and smartphone technology.

UK Finance's latest Payments report said changing consumer habits contributed to 13.2 billion card payments at the end of 2017 overtaking cash payments for the first time.

Contactless payments have grown the fastest, with the number of transactions up 97 percent to 5.6 billion.

The report found almost two thirds of people now use contactless, and no age group or region falls below 50 percent usage.

Meanwhile, cash payments fell 15 percent with more than 3.4 million consumers revealing they barely used it last year.

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 and card acceptance devices, it is anticipated 36 percent of all payments across the UK will be contactless in 2027.

Yet despite this, cash is still the second most frequently used payment method, just behind debit cards, accounting for just over one-third of all payments in 2017.

Around 2.2 million customers mainly used cash for their day-to-day shopping, although nine in 10 of them had a debit card to hand, too.

With greater diversity in the way in which different people in the UK manage their finances and conduct their day-to-day spending, the number of cash payments in the UK is expected to continue to fall over the next decade.

But, it’s anticipated that cash will still retain its place as the second most frequently used payment method in 2027, ensuring that no-one gets left behind.

Stephen Jones, Chief Executive, UK Finance said: "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."

However Which? said despite the growing contactless trend, the need for cash in a climate where face-to-face banking is being phased out , has never been so crucial.