As digital alternatives grew in popularity, Brits did 10% less of their shopping last year with cash, although it continued to be the country's most popular payment method.
According to a British Retail Consortium (BRC) survey based on 10 billion transactions, cash usage as a percentage of sales turnover was down 10% in 2012 compared to the previous year.
And while notes and coins are still the dominant payment method by number of transactions, accounting for 54%, even this is down by seven per cent.
In contrast, debit card payments saw rises by both measures, up six per cent as a percentage of sales turnover and three per cent by the number of transactions. Credit and charge card use was down though.
Meanwhile, alternative options such as PayPal and coupons are beginning to make a serious dent in the figures, accounting for two per cent of total sales turnover in 2012 and five per cent of transactions.
Helen Dickinson, director general, BRC, says: "Cash is still the most popular way to pay, but our survey shows how rapidly alternative and emerging methods are gaining ground, with growth more than doubling on the previous year, albeit from a low base. These methods will be the 'ones to watch' in the future, and retailers are investing heavily to make sure their customers have choice and convenience in ways to pay, whether in-store, at home or on the move."
Dickinson also used the occasion to bemoan the "unjustifiably high charges" on retailers for handling card payments, claiming that the average cost to a retailer of having a credit or charge card payment processed is 25 times higher than for cash - 38p versus 1.5p.