News

Brits expected to choose debit over cash by 2018

May 30, 2017

Rapid growth in the use of contactless cards means that cash will be overtaken as Britain's most frequently used payment method by the end of 2018, according to a new report, UK Payment Markets 2017, from Payments UK, an industry trade group.

For 2018, Payments UK forecasts 13.4 billion debit card payments, of which 4.6 billion (approximately one-third) will be contactless, according to a press release from Payments UK.

Debit totals will just squeak past those expected for cash, which is forecast to comprise 13.3 billion payments in 2018, falling out of the most-favored payment spot for the first time.

This shift from cash to debit will occur three years earlier than previously expected, according to the report. However, Payments UK noted in the release that the forecast doesn't mean the end of cash. Ten years from now, cash will still constitute 21 percent of all payments. Still, this represents a decline of nearly half — from 40 percent in 2016.

"This is a significant shift but it's vital to note that even in the face of this change, we believe any claims the UK will soon become a cashless society are wide of the mark," Payments UK Chief Economist Adrian Buckle said in the release.

"People will always want to choose the payment methods that best suit them, and cash will remain a frequently used payment method for the foreseeable future. In 10 years' time, we will still be using cash for 1 in 5 payments in the UK, even as mobile payments and other innovations provide ever greater choice about how to pay."

Below are other highlights and comparisons fromUK Payment Markets 2017.

2016 statistics:

• cash was still the most frequently used payment method in 2016, at 15.4 billion payments;
• debit cards were used 11.6 billion times in 2016, up 14 percent from the previous year — 1 in 5 of these transactions was contactless;
• 4.1 billion direct debit payments, worth a total 1.3 trillion pounds ($1.63 trillion), were made in 2016;
• credit card use grew 9 percent from 2015 to 2016, with 2.8 billion payments made;
• 1.3 billion payments were made via remote (online or mobile) banking;
• 471 million check payments were processed in 2016, down 14 percent from 2015; and
• 39 million same-day Clearing House Automated Payment System payments were made for a total of  75.6 trillion pounds ($97.8 trillion), just 0.1 percent of volume, but 90 percent of the value of U.K. payments.

2026 forecast:

• 18.2 billion debit card payments forecast for 2026, 57 percent more than 2016;
• 8.7 billion cash payments predicted, down 43 percent from 2016;
• 4.4 billion direct debit payments predicted, up from 4.1 billion in 2016;
• 3.7 billion credit card payments forecast, up from 2.8 billion in 2016;
• 2.2 billion Bacs Direct Credit payments;
• 2.3 billion remote banking payments, 1 billion more than 2016, transmitted via the Faster Payments Service or cleared in-house; and
• 156 million check payments, down 315 million over 10 years.

A free summary of highlights from the report is available to download from the Payments UK website.