22nd June 2018

Convenience of debit card payments puts cash in second place, says UK Finance

The popularity of contactless payments, online shopping and smartphones is having a significant effect on how we manage our money and pay for things, leading to debit cards overtaking cash as the most frequently used payment method in the UK, according to the latest research from UK Finance.

The latest UK Payment Markets report shows how 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. This beats previous forecasts by one year when debit cards would overtake cash within one year. In comparison, cash payments were down 15 per cent year-on-year.

The popularity of contactless payments among UK consumers is a key driver of debit card growth. In total, across debit and credit cards, the number of contactless payments increased by 97 per cent during 2017 to 5.6 billion; 63 per cent of people in the UK now use contactless payments, and no age group or region falls below 50 per cent usage.

Stephen Jones, Chief Executive, 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.”

Key data findings:
• In total, there were 38.8 billion payments made in the UK in 2017, with 89 per cent of these made by individual customers.
• Over the next decade, debit card payment volumes are forecast to grow by more than any other payment method, increasing by 49 per cent to 19.7 billion payments in 2027. This will be driven by the continuing rise of contactless payments, the ongoing growth of online shopping and ever-increasing levels of card acceptance amongst businesses of all sizes, but particularly amongst smaller businesses.
• Contactless cards will account for 36 per cent of all payments in 2027, up from 15 per cent in 2017.
• By the end of 2017 there were nearly 119 million contactless cards in circulation, with 78 per cent of debit cards and 62 per cent of credit cards in the UK having contactless functionality.
• 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. Despite this fall, cash will remain the second most frequently used payment method in the UK in 2027.
• 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. The number of contactless payments made per month was significantly higher than in 2016 (five).
• By 2027 the average adult in the UK is forecast 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.