The digitisation of Britain’s payments networks continues at a rapid pace, although this does not mean that use of physical cash is disappearing altogether.
The latest figures from UK Finance suggest cash remains popular despite the increasing variety of digital alternatives.
According to the banking and financial services trade association, one third of UK adults (34% to be exact) used mobile contactless payments at least once a month in 2023. The number of contactless payments grew 7% year-over-year from 2022 to 2023, up from 17 billion to 18.3 billion.
Contactless payments are conducted through various verticals. Credit and debit cards remain a consistent means of transaction in general, whether for contactless or chip-and-pin payments.
UK Finance reveals that credit and debit cards are the most popular payment method for UK customers, accounting for 51% of all transactions. More consumers are preferring card payments, especially for small transactions, with more businesses accepting these transactions.
Focusing on the contactless aspect, the popularity of mobile methods like Google Pay and Apple Pay is hard to ignore. UK Finance’s research found that 42% of adults used these methods in 2023, up by 30% from 2022. Mobile payments are expected to continue to increase, driven by the fact UK mobile phone penetration is over 90%.
This has also driven an increase in remote banking, with 87% of adults using some form of this – though it is important to note that remote banking also encompasses online and telephone banking.
Mobile banking usage rose from 52% to 60%, but online banking via a computer fell from 65% to 62%, reflecting the UK consumer dependance of mobiles.. UK Finance expects mobile banking to become the most widely used remote banking method over the coming years.
Adrian Buckle, Head of Research at UK Finance, says: “There is a huge amount of choice available to consumers in terms of how they make payments, but we can definitely see the continued popularity of debit cards and contactless.
“This has been driven both by consumer demand as well as new technologies which help to increase acceptance levels, particularly among small and mobile businesses. Mobile contactless payments are growing fast and one third of adults are now making these at least once a month, with scope for usage to increase further.”
Cash usage is not dying out, however. Banknotes, recently updated with the likeness of King Charles III just under two years after his coronation, are the second most popular payment method in the UK after cards.
Cash accounted for 12% of all payments, down 14% in 2022, but the number of people mainly using cash in 2023 rose to 2.6% from 1.7% in 2022. Despite this, cashless living remains a notable phenomenon in the UK, with around four in 10 UK adults ‘living largely cashless’ according to UK Finance.
“This doesn’t mean we are on our way to becoming a cashless society,” Buckle continues. “Cash is still the second most frequently used method of payment in the UK, although on the whole we are using it less and more people are leading largely cashless lives.”
UK Finance has several predictions for the coming years, building on the expectation noted above that mobile banking will become the predominant form of remote banking. The trade group expects debit card payment volume to further increase, driven by the rising popularity of contactless and online payments.
Regarding debit cards, it is expected that over 31 billion payments will be made using these by 2033, whilst cash usage continues to decline.
However, the rate of this decline is expected to slow due to use being concentrated among people with a strong preference for cash, with UK Finance projecting cash to account for 6% of all payments in 2033, amounting to 3.4 billion payments.
Buckle concludes: “Over the next decade we forecast that the long run trend of a decline in cash use and growth of certain other payment methods such as cards and Faster Payments, will continue.
“We also expect to see further developments in the payments landscape that improve the customer experience.”
