It may be received wisdom that older people are wedded to paper money but, in reality, most are enthusiastic users of electronic payment methods, insists Saga, which caters to the over 50s.

According to a Populus survey of 2000 people, 80% regularly pay with cash and, on average, these respondents use cash for 33% of transactions. There is a contrast between old and young: Those under 50 use cash for 36% of transactions, compared to just 29% for over 50s.

Recent British Retail Consortium research found that there has been a 14% decline in the use of cash in the last five years as customers switch to cards. But, despite the over-50s lack of reliance on notes and coins, Saga Personal Finance chief executive Andrew Strong is warning firms not to follow the lead of London's buses and scrap cash.

"The research shows that for people of all ages cash is a key part of their everyday spending, therefore businesses should continue to give people a full choice over how they choose to pay," says Strong.

Debit cards are almost as popular as cash, the Saga survey shows, used regularly by 79% of respondents with almost no difference between young and old. Things are different with credit cards, which are used regularly by only 48% of respondents - 38% of under 50s but 60% of over 50s.

More surprisingly, older people are keener on direct debits. Overall, 71% of those quizzed use this payment method regularly but only 63% of under 50s, compared to 80% of over 50s.

Meanwhile, cheques are generally unpopular, used regularly by just 18% of people, although there is still a clear generational divide, with 28% of over 50s clinging to this tool, compared to just 10% of under 50s.