Retail

Cashless society draws closer with only one in six payments now in cash


The UK has moved a big step closer to becoming a cashless society after official data showed that the number of payments made using notes and coins fell by 35% in 2020. Cash was only used for one in six payments, compared with a decade ago when it accounted for more than half of the total.

Changes in spending habits have been dramatically accelerated by the coronavirus pandemic, and 13.7 million people lived a largely cashless life last year – almost double the 7.4 million figure in 2019.

Banking body UK Finance, which issued the figures, said it was too early to say whether these were permanent changes in payments behaviour. Some of this reflected the fact that many places where people commonly use cash, such as pubs and cafes, were shut for chunks of last year, while the lockdowns prompted a surge in the numbers shopping online. On top of that, some consumers have been avoiding touching banknotes and coins because of Covid transmission worries.

Nevertheless, the findings are likely to fuel concern about millions of people potentially being left behind as the shift to a cashless society speeds up. About 1.2 million consumers still mainly used cash for their day-to-day spending during 2020.

For everyone else, contactless and mobile payments have exploded in popularity.

The number of contactless payments rose by 12% during 2020, and overall they accounted for more than a quarter (27%) of all payments. As recently as 2016, the figure stood at 7%.

This has been driven by a number of factors including the decision to increase the upper limit from £30 to £45 in April 2020, and consumers being encouraged by many retailers to reduce the risk of contact with the virus by using the tap-and-go technology.

About 83% of people in the UK now use contactless, with no age group or region falling below 75%.

By contrast, the number of cash payments, which has been in decline for some years, slumped by 35% in 2020.

“Since 2017, cash use had been declining by around 15% each year, so 2020 represented an acceleration of this decline,” said UK Finance, a trade association for Britain’s banking and financial services sector.

It added that this was “largely attributed to the impact of the pandemic … with cash payments being affected by a greater degree than many other payments”.

Cash was used for 17% of all payments in 2020 – down from 45% in 2015 and 56% in 2010.

Despite this, it remains the second most frequently used payment method behind debit cards.

Sign up to the daily Business Today email

During 2020 there were 13.7 million consumers who either did not use notes and coins at all, or only once a month. This number has grown rapidly: in 2018 it was 5.4 million people, while in 2017 it was 3.4 million.

“While some of this can be attributed to changing payment preferences, it also reflects the fact that during lockdown, people had fewer opportunities to go shopping and were being encouraged by many shops to pay by card or contactless instead of cash,” said the banking body.

Another payment method in decline is the cheque. The number used to make payments fell by 32% last year to 185m. In 2010 it was more than 1bn.



READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.