The UK is adopting cashless transactions at a rapid rate, hastened by the Covid-19 pandemic according to a new report from UK Finance and beneficiaries include online retailers, and tap and go merchants.
Data for 2019 shows that for the first time over half (51%) of all payments are made on cards. Of these 17 billion were on debit cards and seven billion were contactless.
Credit card use was up 7% to 3.3 billion transactions, of which, over one-third (1.3 billion) were contactless.
The use of remote banking also grew across all age groups in 2019 with 72% transacting via online banking and 50% using mobile banking. Additionally, cash payment fell by 15% to 9.3 billion payments.
Overall the number of consumers not using cash or using it just once per month doubled in the UK from 3.4 million in 2017 to 7.4 million in 2019. This trend is likely to have been exacerbated during the extensive coronavirus restrictions in the UK in the first half of 2020. Consumer and retailer behaviour is changing as we move towards more online and contactless transactions and more retailers accept cards and e-wallets such as Paysafecard, PayPal, Neteller and Skrill.
Stephen Jones, CEO of UK Finance explained the shift, “An increase in ways to pay coupled with the change in people’s payment habits may have inadvertently gone some way to prepare the nation for the impact of Covid-19 on their daily lives. With consumers already using contactless payments and remote banking more than in previous years, these technological advances have allowed many people to shop and make payments safely from home or in store”.
Another recent report from Worldpay shows more evidence of an irreversible shift in UK consumer trends finding that online payments via mobile devices are growing by 13% per year and desktop payments are increasing by 6% annually.
In January 2020, 32% of credit card transactions were contactless as were 45% of debit card transactions.
As UK consumers adapt to new social norms such as social distancing, the use of cashless payments is becoming widespread and the Worldpay report found significantly that the use of digital wallets is increasing at a rate of 20% per year.
Compare, for example, the number of PayPal casinos in the UK to the PayPal casinos in Ireland where the adoption of PayPal, the world’s leading digital wallet, is at a much lower rate because the company delayed the rollout of its PayPal Here product and retains a more complicated fee structure than in the UK.
Pete Wickes, SVP Corporate, Worldpay Merchant Solutions, FIS said, “As technology evolves, so does the rapidly advancing payments landscape. Where cash and cards once reigned supreme, we now have been introduced to digital wallets and even ‘Super Apps’, which marry up technology with advancing consumer needs.”
Indeed, it’s clear that current payments trends are unlikely to be reversed as technology and behaviour adapt to the new normal and more and more of us will adopt digital wallets such as PayPal and contactless payments in our everyday lives and become more and more remote from our old friend cash.