The use of cash declined by 16% in 2018, with more than five million people not using it at all.
Cash was used in less than one in three (28%) transactions in 2018, the latest figures from financial industry body UK Finance show.
The report, which looks at the spending habits and methods of the UK public, found half of people (48%) now use mobile banking, up from just 41% in 2017.
The number of payments made online or by mobile grew from 1.6 billion to two billion.
Debit cards account for nearly 40% of all payments, while contactless payments have increased 31% year-on-year. Older card users are now fully adopting contactless with three fifths (61%) reporting they now use the technology.
Extraordinarily however, nearly one in 10 of us, around 5.4 million people, never use cash any more.
Stephen Jones, chief executive of UK Finance, comments: “The same pick ‘n’ mix approach people now take when it comes to music, television or the news is expanding into payments, as consumers take advantage of new technologies to pay in a way that suits them.
“More and more customers are now opting for the speed and convenience of paying with their contactless cards, or using mobile banking to check their balances and make transfers while on the move.
"This rapid rate of technological change is set to continue over the coming decade, as people embrace the ever-widening number of ways to pay and manage their finances, depending on their needs and lifestyle."
Mike Parkes, technical director of GoSimpleTax adds: “We're definitely moving away from cash but I don't think we'll ever eradicate it entirely as it's a preference based thing. There will always be individuals across every generation that prefer cash over electronic payment.
“For some, it might help them manage their finances better or encourage them to budget better. And this goes for industries too, there are some that will always prefer payments via traditional methods such as cash and sometimes even cheques as opposed to card payments and bank transfers.
“The different attitudes in society mean that I don't believe we'll ever see a society without cash entirely, but the advances in technology and normality in electronic payments means we're definitely moving away from it."
The end of cash
The latest figures on the collapse of cash usage are eye-opening. With so many people turning away completely from the payment method the question over the future of cash is as pressing as ever.
After the 2018 Spring Statement, speculation was rife as to whether the government would end the practice of minting copper 1p and 2p coins. The Chancellor Philip Hammond, however, poured cold water on the idea recently by confirming the government would continue to mint the coins.
Louis Lines, business consultant at Accounts and Legal comments: "There is a lot of motivation behind making cash disappear and that comes from the top down through bodies like HMRC as it protects against financial oversight and provides a more accountable record of money moving through businesses.
"I think we'll see cash disappear incrementally through a few different sectors. For example, retail is likely to be cash-free quite quickly, and that's including restaurants. On the other hand, I'd imagine the transition to being cash-free in other sectors will be slower, particularly where there can be a business benefit to using cash - think used car sales and similar trade.
"Overall, I think the penetration of a cashless society will be higher in more urban areas and lower in rural areas due to differing levels of exposure to things like the technology used in a cash-free transactions."
Access to cash, particularly in rural areas, is a growing problem. Changes to the availability of cash could perhaps be forcing a cashless society upon the public, rather than it being a conscious decision to adopt new technologies.
A study from consumer group Which? recently showed the number of free-to-use cash machines was plummeting – almost 1,700 gone in the first three months of 2019.
John Howells, chief executive of cash machine payments network provider LINK, says: “The sharp drop in cash usage of 16% a year means that it is vital now to reform how cash is distributed to maintain broad, free access for all consumers. LINK is determined to deliver this with the support of industry and regulators.”
Bank branches, and cash machine access that comes with them, are disappearing too, with banks becoming ever-more reliant on provision of services through the Post Office.
A recent report from the Parliamentary Treasury Committee admonished big banks from forcing customers to become reliant on these services, an effective taxpayer bailout.
Indeed, the Post Office network itself was recently focus of a warning from the National Federation of Sub-postmasters (NFSB), who cautioned that the network was underfunded and at risk of collapse.
Finally Mr Jones adds: “Technology is not for everyone and cash remains a payment method that is valued and preferred by many, so maintaining access to cash will be vital to ensure no customer is left behind.”
Save our Cash
Also, recently a few times I've been in shops and petrol forecourts when their Card readers have been bust so cash only was accepted... need I say more?