• Change driven by growth in customers choosing contactless – usage almost tripled in 2016  
  • By 2026, contactless is forecast to account for more than one in four (27%) of all payments  

Rapid growth in the use of contactless cards means cash will be overtaken as Britain’s most frequently used payment method by the end of 2018, according to a new report published today (Thursday 25 May 2017) by Payments UK, the trade association for the payments industry. This latest forecast still does not herald the demise of cash – even in ten years’ time it is still expected to make up 21% of all payments.  

Analysis carried out for UK Payment Markets 2017 forecasts that debit cards will become the most frequently used payment method in late 2018, three years earlier than previously predicted due in large part to the increasing popularity of contactless. 

There were nearly 2.9 billion contactless payments in the UK in 2016, more than 2.7 times more than in the previous year (1.1 billion). Contactless payments made up 7% of the total number of payments in 2016, with the continued growth meaning that by 2026 more than one in four (27%) payments in the UK is expected to be contactless. 

Debit cards were used 11.6 billion times in 2016, 14% more than the previous year, with just over one in five of these transactions made using contactless. Cash was still the most frequently used payment method in 2016, used for 15.4 billion payments (3.8 billion more occasions than debit cards). Four out of ten (40%) payments in 2016 were made using cash. 

By 2018, when debit cards are forecast to overtake cash, 13.4 billion debit card payments are predicted, of which 4.6 billion (or one in three) are expected to be contactless. Cash is expected to be used for 13.3 billion payments in 2018, meaning it won’t be the most frequently used payment method for the first time.   

 

Adrian Buckle, Chief Economist at Payments UK, said: 

“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.

“People will always want to choose the payment methods that best suit them, and cash will remain a frequently-used payment method for the foreseeable future. In ten years’ time, we will still be using cash for one in five payments in the UK, even as mobile payments and other innovations provide ever greater choice about how to pay.”

 

In total, 38.7 billion payments were made in the UK in 2016. UK Payment Markets 2017 also publishes data and 10-year forecasts for the other main payment methods, to give a complete picture of the UK’s payments landscape for both consumers and businesses, across every different payment type. 

 

Other notable highlights from UK Payment Markets 2017

2016

  • Cash was still the most frequently used payment method in 2016, used for 15.4 billion payments.
  • Debit cards were used 11.6 billion times in 2016, 14% more than the previous year, with just over one in five of these transactions made using contactless.
  • 4.1 billion Direct Debit payments, worth a total £1,262 billion, were made in 2016.
  • 3.7 billion Credit card usage grew in 2016, with 2.8 billion payments made - up 9% year-on-year. 
  • 2.1 billion Bacs Direct Credit payments were made in 2016.
  • 2016 saw 1.3 billion payments made via remote (online or mobile) banking. These payments were transmitted via the Faster Payments Service or cleared in-house.
  • 471 million cheque payments were processed in 2016, down 14% from 2015.
  • 39 million CHAPS payments worth £75.6 trillion were made – 0.1% of the volume, but 90% of the value of UK payments. 

2026 forecast

  • 18.2 billion debit card payments forecast for 2026, 57% more than 2016.
  • 8.7 billion cash payments predicted for 2026 – down 43% from 2016.
  • 4.4 billion Direct Debits payments predicted in 2026 up from 4.1 billion in 2016.
  • 3.7 billion Credit card payments forecast up from 2.8 billion in 2016.
  • 2.2 billion Bacs Direct Credit payments.
  • 2.3 billion remote banking payments, 1 billion more than 2016, transmitted via the Faster Payments Service or cleared in-house.
  • 156 million cheque payments, down 315 million over 10 years.
  • 43.5 million CHAPS payments, up 4.5 million from 2016.

These figures come from UK Payment Markets 2017, which is available to order from Payments UK from today. A free summary of highlights from the report is available to download from: http://www.paymentsuk.org.uk/industry-information/annual-statistical-publications

 

ENDS

For further details, please contact the press team on 020 3217 8368 or email Shane.McKenna@ukfinance.org.uk.

NOTES TO EDITORS

UK Payment Markets 2017 provides a detailed commentary on the use of payments in the UK over the last 12 months and forecasts payments over the next 10 years. Copies are available to journalists on request; it is available for free to members of Payments UK, or priced at £3,000 for non-members.

About Payments UK
Payments UK is the trade association launched in June 2015 to support the rapidly-evolving payments industry. Payments UK brings its members and wider stakeholders together to make the UK’s payment services better for customers and to ensure UK payment services remain world-class.

www.paymentsuk.org.uk