UK businesses and consumers will use debit cards in more transactions than cash within the next decade, according to a forecast by the UK Payments Council.
The organisation said that the ‘explosive’ growth in technology would see more consumers discard their cheque books and using banking apps on their mobile phone or iPads to make payments.
In a set of forecasts, the Payments Council said the volume of UK cash transactions would decline from the current 20.8bn a year to less than 13.7bn by 2022, a drop of 34%.
At the same time, the use of debit cards will increase from 7.6bn transactions per year to 13.8bn as younger consumers “almost habitually” use their plastic to make purchases. Debit cards have already overtaken cash in terms of the amount spent since 2009, when the respective figures were £264bn and £262bn.
The Payments Council added that in total non-cash methods, such as debit or credit card, contactless payments and cheques, will overtake cash payments and be used for more than half of all transactions by volume in 2015. Mobile payments are expected to almost quadruple in volume, from 356m payments a year to around 1.5bn.
The use of the cheque book will decline further, from the current 823m payments annually to 334m. However, although the use of cheques has fallen steeply in recent years, the Payments Council said they were still used by 45% of adults to make some payments, with usage most prevalent among middle-aged adults.
“Technological change and payment service innovation will be key drivers of change,” said The Payments Council. “The digital economy will continue to grow rapidly, driving change in the way payments are made and received.
“Much recent innovation has been around mobile payments, and mobile has the potential to make a significant impact on the payments landscape.”
The report confirmed that the level of cash payments by both consumers and business rose in 2012, as estimates issued in June had anticipated, as UK households squeezed by the credit crunch turn to cash as a way of managing their budgets.
On day one of SIBOS, panellists unanimously agreed that doing nothing to modernise payments was no longer safe bet for transaction banking.
On day one of Sibos 2017, Stefan Dab, The Boston Consulting Group led a conversation examining the future of correspondent banking, and specifically the pain points corporate treasurers face in their cross-border payments operations and where technology can be developed to alleviate these.
Rising interest rates, excitement around blockchain use cases and cross-border payments were all hot topics at this year's AFP conference in San Deigo.
The US dollar and debt yields falling on the North Korea missile test, treasury being a top target for cyber criminals and why treasurers aren't into real-time payments all hit the latest headlines in the world of treasury this week. Don't miss our ten top news stories from around the world.