Debit card payments overtake cash
Written by Chris Lemmon
The popularity of contactless payments, online shopping and smartphones has led to debit cards overtaking cash as the most frequently used payment method in the UK, according to trade association UK Finance.
Its latest report showed 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.
The popularity of contactless payments among UK consumers has been a key driver of debit card growth. In total, across both debit and credit cards, the number of contactless payments increased by 97 per cent during 2017 to 5.6 billion. Almost two thirds of people in the UK now use contactless payments, and no age group or region falls below 50 per cent usage.
Increasing acceptance of card payments by smaller businesses and people becoming more comfortable and familiar with the speed, ease and security of making low-value payments has also made the use of debit cards more popular, according to UK Finance.
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 per cent of all payments across the UK will be contactless in 2027.
As consumers increasingly turn to contactless payments in situations where previously they may have paid using cash, 2017 saw a decrease in cash payments by 15 per cent, with around 3.4 million consumers almost never using cash at all. Despite this fall, 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.
UK Finance predicted the number of cash will continue to fall over the next decade, but that cash will still retain its place as the second most frequently used payment method in 2027.
Stephen Jones, chief executive at UK Finance, commented: “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.
“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.”
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 increasing levels of card acceptance amongst businesses of all sizes, but particularly 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.