Debit card transactions will outnumber cash payments by the end of 2018, driven by the increasing use of contactless cards.
This is three years earlier than expected, and is the result of faster than expected acceptance of contactless payment technology, according to figures from Payments UK.
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The payments industry trade body revealed that the number of UK contactless payments in 2016 hit 2.9 billion, up from 1.1 billion in 2015. Contactless payments comprised 7% of the total number of payments in the UK last year, and are expected to reach 27% by 2026.
People are now using contactless cards, rather than cash, to pay for small items.
Debit cards were used 11.6 billion times in 2016 –14% more than in 2015 – and just over one in five of those transactions was made using contactless. Cash, meanwhile, was used for 15.4 billion payments.
The number of debit card payments is expected to rise to 13.4 billion by 2018, with one in three of those contactless. Cash is expected to be used for 13.3 billion payments in that year.
Adrian Buckle, chief economist at Payments UK, said the popularity of contactless technology means debit cards will overtake cash as the UK’s most frequently used payment method in late 2018 – three years earlier than expected.
“This is a significant shift, but it’s vital to note that even in the face of this change, we believe any claims that the UK will soon become a cashless society are wide of the mark,” he said.
Cash in the UK is unlikely to disappear, with Payments UK predicting that cash payments will still account for 21% of transactions in 10 years’ time.
“People will always want to choose the payment method that best suits them, and cash will remain a frequently used payment method for the foreseeable future,” said Buckle. “In 10 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.
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