Cash is no longer the most popular form of payment in the UK, according to data released on Monday, which showed debit cards overtook cash for the first time in 2017 thanks to the growing popularity of contactless payments.
British consumers and businesses made 13.2bn debit card transactions last year, compared to 13.1bn cash payments, according to industry group UK Finance’s annual UK Payment Markets report.
The milestone was hit a year earlier than forecast, highlighting the rapid pace of change being brought about by new technology. Contactless payments were the main driver of the increase in debit card payments, with the number of transactions almost doubling over the year.
Stephen Jones, UK Finance chief executive, said the choice of payment options available in the UK was allowing people to pay in the way that best suited them but added that “we’re far from becoming a cash-free society”.
The annual volume of cash transactions fell 15 per cent year on year, and is expected to more than halve over the next decade. Banks have welcomed the shift, which can reduce costs and lower crime.
However, Monday’s announcement comes just weeks after a continent-wide service failure at Visa Europe — which powers more than 95 per cent of British debit cards — highlighted the risks of relying on complex technology.
Many businesses were left unable to accept card payments for an afternoon, leading customers to abandon their shopping and to empty ATMs.
Marc Terry, international managing director at Cardtronics, the UK’s largest independent operator of ATMs, said the Visa outage “illustrated the irrefutable value of cash as the cornerstone of the payments mix in the UK”.
The Bank of England said last week that it would introduce minimum standards for financial companies to meet in the wake of IT failures or cyber attacks after a string of recent incidents.
Adrian Buckle, UK Finance head of research and author of Monday’s report, said: “A key thing is making sure that we have a very secure and robust system that can stand up to any difficulties that can be thrown at it — futureproofing is very much at the front of mind of everyone who operates in the payments sector.”
The report also highlighted the potential growth of alternative payment systems, such as Apple Pay or services that use new Open Banking rules to skip intermediaries like Visa and transfer money directly between bank accounts.
Royal Bank of Scotland’s NatWest brand has already begun trials of one such service but Mr Buckle said he was “cautious” about predicting how quickly they could have an impact. “Contactless technology has actually been around for 10 years already,” he said, “and it’s taken that long to suddenly look like an ‘overnight sensation’.”
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