Debit cards set to overtake cash in the UK three years ahead of schedule
25 May 2017 | 10517 views | 3
The soaring popularity of contactless cards is changing the dynamics of the UK payments industry with new forecasts predicting that paying by plastic debit will overtake cash in 2018, three years earlier than expected.
Debit cards were used 11.6 billion times in 2016, 14% more than the previous year, with just over one in five of these transactions made using contactless. Cash was still the most frequently used payment method in 2016, used for 15.4 billion payments (3.8 billion more occasions than debit cards). Four out of ten payments in 2016 were made using cash.
Analysis by Payments UK suggests that by 2018, 13.4 billion debit card payments are predicted, of which 4.6 billion (or one in three) are expected to be contactless. Cash is expected to be used for 13.3 billion payments in 2018, meaning it won’t be the most frequently used payment method for the first time.
Adrian Buckle, chief economist at Payments UK, says: “The popularity of contactless means that we expect debit cards to overtake cash as the UK’s most frequently used payment method in late 2018, three years earlier than we previously thought. 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."
Ten-year forecasts put together by the industry body suggest that cash payments will decline by 43% to 8.7 billion (but still comprising 21% of all payments), while debit cards will account for 18.2 billion transactions, up by 57%, with one-in-four of all payments expected to be contatless.
Despite the progress, the UK is still lagging behind some of its European neighbours. In the Netherlands, for instance, debit card payments overtook cash in 2015 and currently commands 55% of all point-of-sale transactions.