Cash is no longer king in the UK: Debit cards are now more popular

New figures from the British Retail Consortium (BRC) have revealed that more payments in the UK are now made with cards than with cash.

The annual Payments Survey from the BRC found that debit card transactions accounted for 42.6% of all retail transactions in 2016, overtaking good old notes and coins (which accounted for 42.3% of all retail transactions) for the first time.

‘There were 10.3 billion retail transactions made on a debit, credit or charge card in 2016 – accounting for 54 per cent of all retail payments.’

This is interesting as a sign of the popularity of debit cards. Cards have been used for the majority of retail spending when you look at VALUE of transactions, but never before have they been used more FREQUENTLY than cash.


So why is this happening?

There is an obvious link to be made between the increased use of cards and the falling average value of card payments.

According to the BRC, the average transaction value on cards went from £30.53 (in 2013) to £25.40.


The BRC also pointed to the increasing acceptance and use of contactless payment methods as a reason for the growth in card payments.

Contactless cards – so-called because they don’t have to be inserted into a machine, although the ‘tap and go’ process quite clearly does involve some contact! – now account for about a third of all card payments. In October 2015, the figure was just 10%.

As reported by our sister publication Banking Technology, Transport for London (TfL) recently celebrated the milestone of more than one billion contactless payments (not Oyster) for journeys in the UK’s capital.

There are more than 108m contactless cards in issue in the UK, with £3,913.3m spent using such a card in April 2017, according to the UK Cards Association.

People are falling for contactless

Contactless cards were introduced in the UK in 2007, and it’s fair to say the public was slow to embrace the technology.

Indeed, in our recent focus groups covering the adoption of digital payment methods, Mapa found that – while over-30s and under-30s consumers alike displayed reticence towards digital wallets – they admitted they had felt the same about chip & PIN many moons ago, and indeed contactless when it came to their bank cards. The message was clear: when everyone starts doing it, and I can see the benefits, I will adopt it too.


Of course, there are pitfalls of other contactless payment methods (I’m thinking mainly those good old smartphones) compared to cards. Notwithstanding a merchant acceptance shortfall (see below), consumers are rightly querying why they would leave their cards at home and rely on a device with a finite battery life to pay them through the day. There was also a suggestion by Mapa’s focus group members that customers trust their banks (with the myriad data collected on these smaller transactions) more than phone or network providers, or emerging third parties offering a slick UI.

Increased acceptance of contactless cards

Consumers are using them more. But importantly, more shops are accepting contactless payments.

According to the BRC, more than two thirds of staffed payment terminals in shops are now able to accept contactless cards. A year ago, it was just 47%.

Indeed, as people carry less cash (a MasterCard survey says Britons now carry less than £5 cash in their wallets) it’s becoming imperative for small businesses and charities to keep up technologically.

Will the UK go completely cashless?

The Bank of England doesn’t think so.

When we heard Victoria Cleland, Chief Cashier and Director of Notes at the Bank of England, speak at the Future of Money event in February, she was adamant: cash isn’t going anywhere. There is still a high demand for cash, across Europe. Although frustrating to the central bank, she said, one benefit to consumers is its anonymity, and the fact it can be used for budgeting. She explained the technology that was still being ploughed into creating secure banknotes.


In a speech last month, she claimed that ‘the value of Bank of England notes in circulation peaked in the run-up to Christmas 2016, reaching over £70bn for the first time – an increase of 10% on a year earlier. This is the fastest growth we’ve seen in a decade, and a giant leap compared to the £2.9bn when the ATM was born.’

Want a full picture of the digital wallets and payments landscape? Mapa can help.

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