UK ‘Cashless’ Payments Overtake Physical Money For The First Time

British consumers have given their strongest signal yet that they are ready to ditch physical cash in preference for alternative forms of payment.

Data released by the Payments Council have revealed that 2014 was the first time the UK spent more using non-physical methods rather than cash for the first time last year, with the tipping point coming last July.

Overall, the total number of cash payments made by consumers, businesses and financial organisations in the UK fell to 48 percent last year (from 52 percent in 2013), as customers increasingly turn to debit cards and alternative methods such as contactless payments.

4.4 percent of consumers even admitted to ‘rarely’ using cash at all.

Deep pockets

However, cash remains the most popular payment method for consumers, being used in more than half (52 percent) of all their transactions in 2014, although this is forecast to drop below 50 percent next year.

Cash was also the most popular payment method by volume, followed by the debit card, which accounted for 24 percent of all payments last year.

Overall, some 18 billion cash payments were made in the UK in 2014, worth about £250bn, but this number will continue to fall as digital money becomes ever more popular and consumers look for alternative methods of payment.

“We are reaching a tipping point in the payments industry, said Spiros Theodossiou, VP of product strategy as digital payments specialists Skrill.

“With digital payments overtaking cash transactions for the first time, the move towards a cashless society is well underway. The significant growth seen in contactless transactions last year is further evidence that consumers are gravitating towards faster and more convenient ways to pay.

“However, it is likely that cash will prevail for some time yet as consumers will find it hard to wean themselves completely off cash due to its physical nature and the flexibility it offers. Much like the decline of newspapers, digital alternatives may be more suited to our modern lives but many people remain reluctant to see the end of traditional methods quite yet.”

A recent study by Halifax bank found that just £18 out of every £100 spent in current accounts transactions uses cash, as customers switch to the likes of contactless payments and mobile banking to handle their finances and pay for goods.

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