Brits continue to turn away from cash and cheques

09 September 2010 | 11293 views | 3 credit card chip

The decline of paper money in the UK continued in the second quarter, with cash and cheques both seeing dwindling usage as take-up of electronic alternatives such as debit cards and the Faster Payments service grew.

According to the Payments Council, in the second quarter cheque usage dropped by £21.5 billion, or 10%, compared to the same period in 2009. Every day of the quarter, on average 290,000 fewer cheques were written than the year before - over three fewer per second.

Despite politicians and charities raising concerns, the Council and its member banks have already voted to stop clearing cheques by 31 October 2018, bringing to an end the 350 year old payment method.

Meanwhile, the amount of cash withdrawn from ATMs was £1.6 billion lower than in the second quarter of 2009, a decline of 3.2%.

In contrast, debit card usage rose £7.9 billion year over year, up 12.4% and Faster Payments saw a £16.9 billion - 67% - rise as more banks made the service available to their customers, and consumers and businesses began taking advantage.

Credit card spending saw more modest growth, up just 3.9% as Brits shied away from racking up borrowing, says the Council which also notes that the total value of payments in the UK economy fell 0.6%, suggesting the economic recovery is far from robust.

Sandra Quinn, director, communications, Payments Council, says: "The payments revolution continues apace in the UK. Cheque usage is shrinking dramatically, while credit cards hold less appeal for consumers and businesses. We use cash less where there is an easy alternative, but we're years away from cash falling out of fashion. Debit cards are taking over our daily purchases, while Faster Payments are fast becoming how we transfer our money electronically."

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David Carr - European Prepaid Consultants - Middx | 09 September, 2010, 10:57

These numbers are not that surprising, it would be interesting to get some data on the impact that Prepaid Cards are having on this trend as more consumers who could not previously gain plastic opt for these as a way to pay...

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Paul Love - ACI Worldwide - Watford | 09 September, 2010, 12:50

This is an interesting story which demonstrates real progress for the UK, especially in contrast to today's piece about the cost to the Irish economy of cash and cheques. I think it is very positive news for the industry - especially the significant reduction in the number of cheques being written as we gradually get closer to the 2018 deadline.

Clearly customers are embracing debit cards for the control and convenience that they offer, and they are even continuing to use credit cards in growing numbers. The take-up of Faster Payments must also be classed as a massive success.

It will be interesting to see how these payment trends continue to evolve, especially with more innovative payment methods such as contactless payments for low-value transactions, prepaid cards, or even linked family cards, where different family members, including children and teens, have got cards linked to a single family account.

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Chris Tattersall - LECG Business Consulting - London | 10 September, 2010, 09:56

It's very interesting that the politicians and charities are still referred to as objectors. What are we doing about this? I saw some of the comments made by the politicians when the BBA were given a grilling by the select committee, and they were, to say the least, ill-informed. How are we as a community addressing this? How do we improve the quality of the debate? How do we help people to understand that there are much faster, cheaper, easier and safer methods of payment than cash or cheques, and these apply to the 'vulnerable' in society too, despite what some politicians might think or say.

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