Cash payments now just 15% of consumer spending

UK banking trade body UK Finance has published data revealing that use of cash for payments has declined to just 15% and is this form of consumer spending is forecast even lower in the near future.

“Rather than the UK becoming a cash-free society over the next decade, the UK will transition to an economy where cash is less important than it once was but remains valued and preferred by many,” wrote the report on the shift in consumer spending methods.

Over 23 million consumers were said to have used almost no cash in the past year, with notes and coins forecast to make up just 6% of transactions by 2031. This volume is notably up on the 13.7 million consumers previously who did not use cash and looking further back to 2018, the figure was just 5.4 million.

Alongside the report, there are suggestions in the media that, in a bid to help manage the cost of living crisis, some consumers are finding cash easier to keep a firm tab on on budgets. Cash transactions accounted for 15% of payments, down 1.7% on 2020’s data. This remains the second most popular payment form, though it is noted that the data is more than likely skewed by many businesses reverting to card only during Covid’s height in order to minimise contagion risks.

Debit cards represented 48% of transactions in 2021, with the popularity of contactless payments increased. UK Finance reported that almost a third of all transactions made by card were contactless in 2021, up 36% year-on-year and boosted further by the spend limit rising to £100 in October of 2021.

Elsewhere in its findings, the Buy Now Pay Later (BNPL) industry is quickly growing, in particular among younger people, though usage peaks among those aged 35 to 44. 12% of all people used the credit system to buy goods last year.

In terms of business payments, Faster Payments overtook Bacs Direct Credit as the payment method most used.