Cash still top dog but contactless on the rise
The number of cash payments in the UK decreased by 11% between 2015 and 2016, although notes and coins still rule the roost, according to UK Finance.
Consumers and businesses made 15.4 billion cash payments in 2016 – down from 17.2 billion in 2015 (a decrease of 11%). Yet notes and coins were still used 25% more often than the second most frequently-used method; debit cards (11.6 billion). During 2016, cash represented 44% of all payments made by consumers – the second year in a row where consumers used cash for fewer than 50% of all payments. During the same period, cash payments reached £240 billion, accounting for 15% of the total value of consumer spending, a decline of 5% compared to the previous year. This represented 3% of all spending in the UK, excluding CHAPS, (once payments by businesses were taken into account). 26% of consumer cash payments were for a value of £1 or less, and 61% were for a value of £5 or less.
The average value of a cash payment has increased over the last 10 years from £11.58 in 2006 to £15.80 in 2016 – owing to inflation and changing consumer preferences, as cards are increasingly used to make low-value payments. There were 2.9 million consumers who rarely used cash in 2016, representing 6% of the UK’s adult population. Younger consumers are more likely to be infrequent users, with more than one in ten of those aged 25-34 making one cash payment each month or no cash payment at all. At the opposite end of the scale, there were 2.7 million consumers (5% of the adult population) who relied almost entirely on physical money to make their day-to-day payments during 2016.
Over the next decade the number of cash payments is forecast to fall by 43% to 8.7 billion payments with the total value predicted to fall by 23% to £185 billion in 2026. Adrian Buckle, Chief Economist at UK Finance, says: “It is clear that over the past few years we have witnessed a significant shift away from cash use in this country with contactless cards undoubtedly causing a decrease in the use of notes and coins. However we don’t believe that the UK is on the verge of becoming cashless, as some reports have claimed. People will always want to choose the payment methods that best suit them and, for the foreseeable future, in lots of cases that will continue to be cash.”