- At the end of 2017, UK consumers made 13.2 billion debit card payments compared to 13.1 billion cash payments
- Almost two thirds of Britons now using contactless payments as the number of payments doubles in one year
- Evolving consumer habits, increasing access to card payments and new technology are providing consumers with more choice
- Despite this, cash is predicted to remain the second most frequently used payment method in the UK in 2027
The popularity of contactless payments, online shopping and smartphones is having a significant effect on how we manage our money and pay for things, leading to debit cards overtaking cash as the most frequently used payment method in the UK, according to the latest research from UK Finance.
The latest UK Payment Markets report shows how new technology, payment innovation and changing consumer habits contributed to 13.2 billion card payments at the end of 2017 overtaking cash payments (13.1 billion) for the first time. This beats previous forecasts by one year when debit cards would overtake cash within one year. In comparison, cash payments were down 15 per cent year-on-year.
The popularity of contactless payments among UK consumers is a key driver of debit card growth. In total, across both debit and credit cards, the number of contactless payments increased by 97 per cent during 2017 to 5.6 billion. Almost two thirds (63 per cent) of people in the UK now use contactless payments, and no age group or region falls below 50 per cent usage.
An increasing acceptance of card payments by smaller businesses and people becoming ever-more comfortable and familiar with the speed, ease and security of making low-value payments has also made the use of debit cards more popular. By the end of 2017 there were nearly 119 million contactless cards in circulation and, with customers and businesses increasingly choosing to use contactless cards and card acceptance devices, it is anticipated 36 per cent of all payments across the UK will be contactless in 2027.
As consumers increasingly turn to contactless payments in situations where previously they may have paid using cash, 2017 saw a decrease in cash payments by 15 per cent to 13.1 billion payments. Around 3.4 million consumers almost never used cash at all, instead relying on cards and other payment methods to manage their spending. Yet despite this fall, cash is still the second most frequently used payment method, just behind debit cards, accounting for just over one-third (34 per cent) of all payments in 2017. Around 2.2 million customers mainly used cash for their day-to-day shopping in 2017, although nine out of ten of them had a debit card they could use if they chose, and the majority used other payment methods to pay their regular bills.
With greater diversity in the way in which different people in the UK manage their finances and conduct their day-to-day spending, the number of cash payments in the UK is expected to continue to fall over the next decade. But, it’s anticipated that cash will still retain its place as the second most frequently used payment method in 2027, ensuring that no-one gets left behind.
Stephen Jones, Chief Executive, UK Finance said: “The choice of payment options available in the UK is allowing people to choose to pay the way that best suits them. But we’re far from becoming a cash-free society and despite the UK transforming to an economy where cash is less important than it once was, it will remain a payment method that continues to be valued and preferred by many.
“These trends are likely to shift further over the next decade. Developments such as Open Banking are expected to bring extensive changes to the payments landscape, something that will likely shape how we interact with our money in the coming years.”
- In total, there were 38.8 billion payments made in the UK in 2017, with 89 per cent of these made by individual customers.
- Over the next decade, debit card payment volumes are forecast to grow by more than any other payment method, increasing by 49 per cent to 19.7 billion payments in 2027. This will be driven by the continuing rise of contactless payments, the ongoing growth of online shopping and ever-increasing levels of card acceptance amongst businesses of all sizes, but particularly amongst smaller businesses.
- Contactless cards will account for 36 per cent of all payments in 2027, up from 15 per cent in 2017.
- By the end of 2017 there were nearly 119 million contactless cards in circulation, with 78 per cent of debit cards and 62 per cent of credit cards in the UK having contactless functionality.
- The number of cash payments in the UK is expected to continue to fall over the next decade, as consumers turn to alternative payment methods, most notably debit cards. There are expected to be 6.4 billion cash payments in the UK in 2027, accounting for 16 per cent of all payments. Despite this fall, cash will remain the second most frequently used payment method in the UK in 2027.
- The average adult in the UK made 54 payments per month during 2017. Of these, 20 payments were by debit card with another 20 made by cash. The average adult also made nine contactless payments per month in 2017. The number of contactless payments made per month was significantly higher than in 2016 (five).
- By 2027 the average adult in the UK is forecast to make a similar number of payments each month however the frequency of using certain payment methods will change. 28 of these payments will be made using debit cards, with cash being used 12 times each month. The average adult will also make 22 contactless payments per month in 2027.
Notes to Editor
UK Finance is a trade association formed on 1 July 2017 to represent the finance and banking industry operating in the UK. It represents around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation brings together most of the activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association.
Data sources and methodology
UK Finance’s annual Payment Markets Review draws on a variety of data sources. These include:
- Data from the UK’s payment clearing schemes, measuring the number and value of inter-bank payments;
- Data from UK Finance members measuring:
- the number and value of account-to-account payments cleared in-house (or within an agency banking relationship) without passing through the central clearings;
- the number of cards in issue, and the volume and value of card payments;
- the value of cash withdrawn by account-holders;
- Data from LINK measuring the number of LINK-connected cash machines and the value of cash obtained via the LINK network;
- Market research data from the National Payments Study, which is conducted annually on behalf of UK Finance by Ipsos MORI, providing a wealth of information about personal financial holdings, payments behaviour, approach to bill payments, payment of wages and salaries, and other aspects of personal financial management. This is a survey of 2,000 consumers, including an extensive questionnaire and a payments diary;
- Data arising from interviews with UK Finance members, as well as other providers and significant users of payment services; and
- Published data and projections from the Bank of England, the Office for National Statistics, HM Treasury, the Office for Budget Responsibility, the Payment Systems Regulator, the Financial Conduct Authority and other organisations.
All of this data is combined by UK Finance’s expert analysts, in order to produce a detailed picture of how consumers, businesses, government and not-for-profit organisations make and receive payments in the UK each year.
The Payment Markets Review has been conducted for more than 25 years, providing unrivalled data on how trends in payments in the UK have changed over time. This enables UK Finance to produce detailed forecasts of how payments will change over the next ten years, taking into account known and confirmed developments.