CASH STILL KING BUT CROWN PRINCE CONTACTLESS AWAITS

336 Views
Email this to someoneShare on FacebookShare on Google+Share on LinkedInShare on StumbleUponTweet about this on Twitter

Cash was the most frequently used payment method in the UK in 2016. However its relative importance is declining as consumers turn to alternative payment methods, such as debit and contactless cards, figures from UK Finance show.

For the third year in a row, cash represented less than half the total volume of payments made in the UK (44 percent). Consumers and businesses made 15.4 billion cash payments in 2016, a decrease of 11 percent. The total value of consumer cash payments was £240 billion in 2016, down five percent.

During the last decade, cash payment volumes have declined by 33 percent. Over the next decade the volume of cash payments is forecast to fall by 43 percent to 8.7 billion payments. The total value is predicted to fall by 23 percent to £185 billion.

The decline in cash usage will likely be driven by the increasing use of debit cards and the use and acceptance of contactless payment cards. Additional factors include the growth in mobile payment services and remote banking, as well as generational shifts, changing employment patterns and levels of economic growth.

“It is clear that over the past few years we have witnessed a significant shift away from cash use with contactless cards undoubtedly causing a decrease in the use of notes and coins,” commented Adrian Buckle, chief economist, UK Finance. “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.”

There were 2.7 million consumers (five percent of the adult population) who relied almost entirely on cash to make their day-to-day purchases in 2016. These cash-users were evenly spread across different age groups. However people on lower incomes were far more likely to rely mainly on cash compared to more affluent households. Indeed more than half the consumers who relied mainly on cash had total household incomes of less than £15,000 per year.

At the opposite end of the scale, there were a similar number of people (2.9 million) who rarely used cash. Younger age groups were more likely to be cash-abstainers than those in older age groups. For example, one-in-ten people aged 25-34 made one cash payment or less per month in 2016.

The declining use of cash in the UK comes amid news that London’s transport network has now seen more than one billion pay-as-you-go journeys made by contactless payment cards. Lighthouse contactless merchant, Transport for London (TfL), launched contactless payment on London’s buses in December 2012 and on tube and rail services in September 2014.

In total, 40 percent of all pay-as-you-go journeys are currently made using contactless bank cards, up from 25 percent in early 2016. Customers from more than 100 countries have used contactless payments via cards and mobile devices on the TfL network, with more than 20 new countries added over the last year, including Estonia, Morocco and Peru.

FAST CASH FACTS

• Almost nine-in-ten cash payments made by UK consumers were in the retail, travel
and entertainment sectors.

• The number of cash payments less than £1 has halved over the last decade.

• More than three-fifths of cash payments were for £5 or less in 2016, reflecting the extensive use of cash for low-value payments.

• The average value of a cash payment has increased over the last decade from
£11.58 in 2006 to £15.80 in 2016, due
to inflation and changing consumer preferences.

• UK businesses made just one percent of cash payments in 2016.

Email this to someoneShare on FacebookShare on Google+Share on LinkedInShare on StumbleUponTweet about this on Twitter

About Author

Leave A Reply