The numbers of people using cash to pay for everyday purchases in the UK declined by 11% over the past year as growth in contactless card use accelerated.
Consumers and businesses made 15.4 billion cash payments in 2016 - down from 17.2 billion in 2015, according to figures released by UK Finance. However despite the decline, cash was still used 25% more often than the second most frequently-used method; debit cards (11.6 billion).
During 2016, cash represented almost half (44%) of all payments made by consumers - the second year in a row where consumers used cash for fewer than 50% of all payments. During the same period, cash payments reached £240 billion, accounting for 15% of the total value of consumer spending, a decline of five percent compared to the previous year.
More than one in four (26%) consumer cash payments were for a value of £1 or less, and more than three in five (61%) were for a value of £5 or less.
The trend downwards for notes and coins contrasts with monthly figures released earlier this week by UK Finance displaying 143% growth in contactless payments in June, with consumers continuing to use their cards for lower value purchases.
Over the next decade the number of cash payments is forecast to crash by 43% to 8.7 billion with the total value predicted to fall by 23% to £185 billion in 2026.
Adrian Buckle, chief economist at UK Finance, says: “It is clear that over the past few years we have witnessed a significant shift away from cash use in this country with contactless cards undoubtedly causing a decrease in the use of notes and coins. However we don’t believe that the UK is on the verge of becoming cashless, as some reports have claimed. People will always want to choose the payment methods that best suit them and, for the foreseeable future, in lots of cases that will continue to be cash.”