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Consumers spent more money using debit cards than cash for the first time last year, due to developments in contactless and mobile payments.
According UK Finance data, there were 13.2 billion debit card transactions in 2017, compared with 13.1 billion for cash – a change which has come a year earlier than Payments UK predicted.
The increase in card payments is driven by the leap in contactless purchases, which increased by 97%, with almost 119 million contactless cards being used by the end of the year.
Reports last year highlighted the surge in contactless payments, as mobile purchases rose 336% during the first six months of 2017, compared with the same period in 2016.
In contrast, the latest UK Finance data found cash payments decreased by 15% in 2017, with 3.4 million customers rarely paying in cash.
The retail sector already experienced the shift in 2016, when 42.6% of transactions were made by debit card compared to 42.3% for cash.
The British Retail Consortium cited the increase in the spending cap from £20 to £30 on contactless devices as a major reason for increased card payments.
UK Finance’s CEO, Stephen Jones, said all the new payment methods are lowering the importance of cash, but it still has some way to go before being totally outdated.
“The choice of payment options available in the UK is allowing people to choose to pay the way that best suits them,” he said.
“But we’re far from becoming a cash-free society, and despite the UK transforming into an economy where cash is less important than it once was, it will remain a payment method that continues to be valued and preferred by many.”
Read more about payments
- UK customers used contactless devices for 42% of card payments in 2017, according to data from Paymentsense.
- Santander is partnering with blockchain firm Ripple to enable customers to make same day international payments.
- Over a quarter of UK shoppers are prepared to use wearable devices to make contactless payments, according to research from Mastercard.
While UK Finance predicts debit card transactions will increase by nearly 50% by 2027, it expects cash to remain the second-most-used option. Contactless is also set to make up over a third of all payments by this point, predicted UK Finance.
Jones said current trends are likely to continue due to initiatives such as open banking, a regulation which allows third parties to access customers’ financial information and offer more personalised services.
“Developments such as open banking are expected to bring extensive changes to the payments landscape, something that will likely shape how we interact with our money in the coming years.”