Contactless payment on the money as notes and coins use plunges

// Use of notes and coins plunges amid rise in card and contactless payments

// Cost of living budgeting could see cash regain some popularity

More than 23 million people in the UK used almost no cash last year, turning to contactless payment and cards according to banking body UK Finance.

It predicts that notes and coins will account for just 6% of all payments within a decade, though there are some indications that cash is making a comeback as a result of the cost of living crisis, with under-pressure households returning to notes and coins to help with budgets.

UK Finance said debit cards were the most-used payment method during 2021, accounting for 48% of all payments and underlining the continued growth in popularity of contactless cards.

The number of cash transactions fell by 1.7% last year, though it remained the second most commonly used method, accounting for 15% of payments.

However, the number of people eschewing cash soared in 2021. This could be because some businesses went card-only during the pandemic, or did not accept cash for a time.

READ MORE: Contactless payment limit to increase to £100

During 2021, 23.1 million consumers either used no notes or coins, or used them only about once a month, up significantly on the 13.7 million consumers the previous year who did not use cash. In 2018 that number was just 5.4 million people.

However, 1.1 million consumers used mainly cash for day-to-day shopping, though UK Finance said it expected cash usage to continue to fall. It forecast that by 2031, notes and coins would account for only 6% of all payments made in the UK.

“Rather than the UK becoming a cash-free society over the next decade, the UK will transition to an economy where cash is less important than it once was but remains valued and preferred by many,” said a spokesperson.

UK Finance said that almost a third of all payments in the UK were made by contactless methods in 2021, up 36% on 2020, with phone payment also on the rise.

The report also gave an insight into the growing popularity of buy now, pay later (BNPL) credit. UK Finance’s research found that 12% of people used this to buy goods last year. Younger people were more likely to use the BNPL, though the group that used it most are aged 35-44.

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