Debit card payments have overtaken cash use. New figures show contactless technology is taking a firm hold on day-to-day spending with 25-34 year olds embracing the rise of new technology faster than expected.
According to banking trade body UK Finance.
- 13.2 billion debit card payments were made last year versus 13.1 billion cash payments.
- 14% rise on debit card payments compared to the previous year, use of notes and coins dropped by 15%.
- 3.4 million people hardly used cash at all during the year.
- Only 15% of the 38.8 billion payments made in the UK in 2017 were for regular bills and commitments.
- 5.6 billion contactless payments, almost double the amount of the previous 12 months.
Contactless and Spontaneous Spending
The annual report into the way consumers make payments revealed that the UK is a nation of spontaneous spenders. Purchases have increasingly been made using contactless cards, most commonly used in supermarkets. Card suppliers say that public transport and car parking have also become regular spots for the use of contactless cards.
In 2017, contactless cards accounted for 15% of all payments. UK Finance – which represents the major banks – has predicted this proportion to rise to 36% a decade later. The growth of online shopping and card acceptance among smaller traders would lead to further growth in debit card use in general, UK Finance said.
Younger Generation Moving Away from Cash
Young consumers, aged between 25 and 34, were most likely to make contactless payments. Those who shunned cash entirely were also most likely to be among this age group. However, there were 2.2 million people who predominantly used cash when shopping last year. So while debit card use may have overtaken cash use faster than the industry expected, notes and coins still had an important role to play.
“The choice of payment options available in the UK is allowing people to choose to pay the way that best suits them, but we are far from becoming a cash-free society. 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.” – Stephen Jones, chief executive of UK Finance.
Financial Technology on the Rise
Card technology will increasingly be found in anything from watches to other “wearable” items.
“We have seen a surge in the use of wearable and mobile payments. Consumers are increasingly able to match their payment accessory or device to their lifestyle or fashion taste. We expect this increase in popularity to continue for the foreseeable future,” Adam Herson, a director at Barclaycard Mobile Payments,
However, consumers vulnerability to failures in technology have been made clear in recent IT problems. Most notably the shutdown in Visa services following a hardware failure which left European customers unable to make some payments for several hours. At the time, Visa apologised and said the outage was not down to “unauthorised access or a cyber attack”.