Cash is still king, but not for long, according to new research. Payments made on debit cards are set to overtake cash as the most frequently-used payment method in the UK according to new figures from trade association Payments UK. The new report claims that more than 72,000 payments were made by consumers and businesses last year, adding up to a total of 38bn payments during 2015. That figure is set to hit 42bn payments by 2025, or 79,044 per minute driven by an uptick in card usage.
“Technology, consumer choices, business behaviour and market developments are major factors in how we choose to pay, and will have a major impact on how things change over the next ten years,” says Adrian Buckle, the chief economist from Payments UK. “This year’s UK Payment Markets report reveals a picture of consumers and businesses more ready than ever to reassess how they make payments and make the most of the convenient, cost effective and innovative options that are available.”
For now, cash is set to remain the most popular form of payments, accounting for 45% of all payments made in the UK last year. That share is set to fall by around half to 27% by 2025 with the tipping point set to come around 2021 when the report anticipates that debit card payments will hit 14.5bn and overtake 13bn cash payments.
Contactless technology is expected to drive the higher rate of card payments, according to Payments UK, as card holders opt for faster tap and go payments. The report predicts that by 2025, just over half (50.2%) of all UK payments will happen on either a credit, debit or charge card. On the consumer side, the report says that on average a UK adult made 20 card payments per month last year with one in ten of those being contactless.
By 2025 card usage overall is expected to grow, leading to around 30 payments per month with 14 of those happening via contactless technology. The card itself, however, will not necessarily be used, with mobile payments via digital wallets like Apple or Samsung Pay becoming more popular.
“With so much innovation happening in payments at the moment – not just from traditional payment providers but increasingly from new players such as retailers, FinTechs and other technology providers – it is very difficult to predict which of these new innovations will change the face of the way we pay,” says Buckle. “How their fortunes fare rests in the hands of consumers and businesses but one or two of them are bound to be big winners and potentially losers in the next decade.”
Global digital payment volumes are set to reach 426.3bin transactions in 2015, according to the World Payments Report 2016 fromCapgemini and BNP Paribas.
Despite faster payment technologies, business-to-business payments by paper cheque show no sign of decline from three years ago.
Cheques are become less and less common in the UK according to research from global market research firm Mintel which claims Britons' use of contactless cards has overtaken cheque payments for the first time.
Nordic payments processing firm Nets Holdings is planning an IPO in Copenhagen this year.