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UK Moves One Step Closer To A Cashless Society

June 28th, 2018

UK Moves One Step Closer To A Cashless Society

Cards have overtaken cash as the most popular form of payment in the United Kingdom, according to figures published by UK Finance, the trade body representing the UK financial services sector.

In 2017, UK consumers used debit cards to make 13.2 billion payments, 14% higher than 2016. Meanwhile, the number of cash transactions fell by 15% to 13.1 billion. This is the first time that debit cards have surpassed cash as the most popular form of payment. Around 3.4 million Brits almost never used cash at all, relying on cards instead.

UK Finance also reported that the volume of contactless card payments doubled to 5.6 billion in 2017. Contactless wasn’t popular when launched in 2008, mostly due to concerns about fraud. But now nearly two-thirds of Brits use it, and by the end of last year there were almost 119 million contactless debit and credit cards in circulation. Contactless payments have also received a boost from adoption by some sizeable merchants. For instance, public transport network Transport for London allows commuters to pay for travel with a bank card rather than having to top up an Oyster travelcard. Losses due to contactless fraud have increased though, nearly doubling to £5.6 million in the first six months of 2017 compared to a year earlier and exceeding the £5.3 million loss as a result of cheque fraud in the same period.

There are a couple of reasons that possibly explain why cards have taken over cash payments at such a fast pace. Firstly, shoppers have become accustomed to simply tapping their card on the reader, so businesses of all sizes have had to embrace this new technology. Secondly, what could be coined the ‘Amazon effect’ has led to a higher volume of online shopping which requires some form of non-cash payment.

UK Finance predicts that the number of cash transactions will continue to fall over the next 10 years, totalling 16% by 2027. Contactless payments will account for 36% of all transactions by then.

That isn’t to say cash’s days are numbered though, as it’s still the second most popular form of payment. Just over a third of all payments are in cash, and 2.2 million Brits reported mainly relying on it for their day to day expenditure. However, 90% had a debit card and used methods other than cash to pay their regular bills.

You can find the full report here.