The expression “cash is king” may be about to lose its value according to payments industry association, Payments UK.
Last year, UK consumers made 38.7 billion payments, with cash and debit cards accounting for more than half between them.
But the association has forecast that by late 2018, cash will no longer be the primary payment method for UK consumers. Instead, it believes debit cards will soon be “king”.
Brits made 11.6 billion debit card payments in 2016, a staggering 14% year-on-year increase. And while cash is still the most common form of payment – used for 15.4 billion payments in 2016 - it is declining quickly. Payments UK expects its use to fall by 43% to 8.7 billion payments in 2026. In comparison, it forecasts a 57% increase in the use of debit card payments, taking the total number of such payments to 18.2 million in 2026.
Payments UK points to the “rapid growth in the use of contactless cards” as one of the most important factors behind the drop in cash.
When debit cards overtake cash next year, contactless is expected to account for a third of the transactions.
Contactless payments nearly tripled in 2016 from 1.1 billion to 2.9 billion payments, and it now represents 7% of all transactions made. It is predicted that by 2026, contactless will account for a quarter of all payments.
These contactless figures do not, however, include payments made via mobile devices, such as through Apple Pay or Android Pay, which currently account for a relatively small amount - 499 million payments - but are expected to increase by 66% over the next decade.
‘Any claims the UK will soon become a cashless society are wide of the mark’
That said, don’t expect Britain to become a cashless society – the association predicts in ten years’ time that cash will still make up 21% of our payments.
Adrian Buckle, chief economist at Payments UK, says: “The popularity of contactless means that we expect debit cards to overtake cash as the UK’s most frequently used payment method in late 2018, three years earlier than we previously thought. This is a significant shift but it’s vital to note that even in the face of this change, we believe any claims the UK will soon become a cashless society are wide of the mark.”