Cash payments plummet to £18 out of every £100 spent
Cash payments make up just £18.33 for every £100 spent as Brits embrace alternative ways to pay in the digital age.
Analysis from Halifax customer current accounts found that cash made up just 16.6% of total transactions in 2014 – down from 17.9% in 2013 – as customers increasingly turn their back on cash and cheques in order to pay for goods and services.
Payments by debit card account for over half (56.7%, up from 54.9% in 2013) of all transactions and are worth £29.36 per £100 on average, while direct debits make up 19.4% of the total and are worth £20.84 for every £100 spent.
Interestingly, £15.09 in every £100 is now spent via 'faster payment' methods such as mobile and internet banking as well as contactless payments. While they make up just 2.7% of total transactions - up from 2.3% in 2013 - faster payments recorded the biggest spending increase of all payment methods, compared to 2013, when £12.42 was spent per £100 in this way.
In sharp contrast, those paying by cheque now account for just 1.2% of total transactions - a fall from 1.5% in 2013. Cheque payments now account for £8.14 of every £100 spent.
Different ways to pay
Nick Young, head of Halifax current accounts, said: "This trend away from cash is likely to go on as banks innovate and provide customers with more convenient ways to pay for their goods and we continue to see the rise of new, non-traditional entrants into the payments market.
"Consumers now have much more choice regarding payment methods and have adjusted their spending habits accordingly. As the number of ways to pay on debit card continues to increase, we are likely to continue to see a corresponding decline in the use of cash."
Issued by a bank as part of a current account and, in a nutshell, serves as electronic cash. Unlike a credit or charge card, where you get an interest-free period before you have to settle the bill, the funds spent on a debit card are withdrawn immediately from your current account. Unless you’ve arranged an overdraft, if you don’t have the cash in the account, you can’t spend it.