More than half of all payments in the UK were made by card and contactless methods last year, making Britain a majority card-based society for the first time as the coronavirus crisis accelerates the move away from cash.
Payments made by credit, debit and charge cards accounted for 51 per cent of the 40bn payments made over the year, with contactless payments rising 16 per cent to 8.6bn, according to data from the banking lobby group UK Finance.
Meanwhile the use of cash fell 15 per cent to make up less than a quarter of all payments. Payment methods used for the remainder included direct debits, standing orders and faster payments, which have been boosted by the widespread uptake of online and mobile banking services.
Stephen Jones, chief executive of UK Finance, said crossing the tipping point for card and contactless payments may have “inadvertently” prepared the UK for the coronavirus lockdown, which has led shopkeepers and consumers to avoid handling cash and spurred a boom in online shopping.
“With consumers already using contactless payments and remote banking more than in previous years . . . the impact of Covid-19 may accelerate these habits for many customers,” Mr Jones said.
At the start of the UK lockdown, ATM transaction volumes fell as much as 62 per cent year on year, according to data from Link, which runs the UK’s cash machine network. Despite a slight uptick in recent weeks as the lockdown eases, the amount being withdrawn is still roughly half compared with last year.
Barclays also reported on Wednesday that more than 90 per cent of its customers’ face-to-face transactions were now made using contactless payments, which increased by 23 per cent in 2019 compared with the year before.
At the end of March, finance and retail industry bodies accelerated a decision to increase the limit on contactless spending from £30 to £45 because of the coronavirus crisis.
The UK government also told businesses to encourage people to pay by card, despite the World Health Organization insisting that notes and coins do not pose any additional risk of transmitting the virus.
However, Mr Jones added that the lobby group was “fully aware” that not all people have digital banking set up and are still dependent on physical cash and bricks-and-mortar banks.
According to UK Finance, there are 2.1m consumers who still mainly use cash for their day-to-day shopping. However, the number of people not using cash at all or only using it once a month has more than doubled in two years — from 3.4m people in 2017 to 7.4m in 2019.
“We are working flat out to ensure people have access to cash and everyday banking services remain available to help the country through these difficult times,” Mr Jones said.
“The fact that over 9bn payments were made in cash in 2019 shows how many people still depend on it,” said Natalie Ceeney, a former civil servant and banker who led an industry review into the future of cash last year.
“This UK Finance data was taken before the impact of Covid-19, which has accelerated the shift to digital payments and further challenged the viability of the cash infrastructure . . . Until digital payments work for everyone, we need to maintain people’s ability to access and pay with cash,” Ms Ceeney added.