Nearly half of UK adults used mobile banking in 2018 and one in 10 now chooses to live a near-cashless life, as people rapidly take up new payments technology, research has found.
The annual report from UK Finance, the industry body, underlines the pace of change in payment methods over the past decade, with more people choosing to use phones, tablets and computers to pay for goods and services online, the rise of contactless cards and the retreat of cash.
In 2016, just 2 per cent of adults were registered to use payment services via their mobile phone. That rose to 16 per cent in 2018, as more consumers took up apps such as Google Pay, Apple Pay and Samsung Pay.
The use of contactless technology has jumped by 31 per cent in the past year, as the popularity of the “touch and pay” system drove a rise in the take-up of debit cards, UK Finance said. More than two-thirds of the adult population (69 per cent) made a contactless payment last year, compared with 63 per cent in 2017, and nearly the entire adult population (98 per cent) now owns a debit card.
“More and more customers are now opting for the speed and convenience of paying with their contactless cards, or using mobile banking to check their balances and make transfers while on the move,” said Stephen Jones, chief executive of UK Finance.
The survey combines data gathered from 250-plus financial services companies represented by UK Finance, as well as results of its survey of thousands of consumers about their payment habits.
Cash was overtaken by debit cards in last year’s figures as the most common method payment, but it remains the second most popular form in the latest figures. However, more people are living virtually cashless — defined as using notes and coins for payment once a month or less frequently.
The number of adults living nearly without cash rose from 2.9m in 2016 to 5.4m in 2018. Young people are leading the trend, with 17 per cent of 25 to 34-year-olds going near-cashless, but a significant proportion of older groups are also turning away from notes and coins, with 7 per cent of over-65s said to be going cashless. The number of cash payments fell by 16 per cent in 2018.
Some campaign groups have raised fears that declining cash use is not a matter of choice for many, but caused by the loss of ATMs across the UK banking network. The UK Finance figures suggested the move away from cash had been under way for over a decade, predating the recent big losses in cash machines.
The numbers who mainly use cash fell, but showed a relatively shallow decline compared with the rise in those going cashless: 1.9m people mainly used cash in 2018, down from 2.7m in 2016. Cash is often a preferred payment method among lower-income groups, who may not have access to a bank account or other forms of payment technology.
The report also makes predictions about the future of payment methods over the next decade. While cash will go further out of fashion, it said, it is still likely to account for one in 10 payments in 2028, down from 28 per cent in 2018. Ten years ago, 60 per cent of all payments were made with cash.
The proliferation of new types of payment method has raised concerns over security. Criminals stole £1.2bn in 2018, according to previous data from UK Finance, up from £967m in 2017. This included a rise in fraudsters illegally accessing customers’ accounts and cards.
Complaints about banking scams reached a record high in the past financial year, according to figures in May from the UK’s Financial Ombudsman Service.
Customer complaints about financial fraud in 2018-19 were up 40 per cent on the previous year, FOS said. The fast-rising proportion of so-called “push payment fraud”, where customers are duped into authorising money transfers online, led banks to introduce a voluntary code last week aimed at bolstering compensation for victims.
Some payment methods are less vulnerable to the theft of large sums of money. Contactless cards, for instance, allow shoppers to spend a maximum of £30 per transaction.
The growth of mobile payments, however, has underlined previous warnings from technology experts about “man in the middle” attacks, where flaws have been discovered in mobile apps that could have enabled criminals to steal sensitive customer data.