Does progress of technology herald a world without cash?
Contactless technology has changed the way we pay – and there are more developments to come, as Vicky Shaw reports
Smartphones, online and mobile banking and “tap and go” contactless payments are rapidly changing the way we pay for things.
Last year, the number of payments made by debit cards across the UK overtook the number of cash payments for the first time, according to figures from trade association UK Finance.
The growing popularity of contactless payments, which allow people to make payments of up to £30 with a single swipe, was a big driver behind debit cards overtaking cash. There were 13.2 billion debit card payments in 2017, while 13.1 billion payments were made in cash.
Here’s a look at how the way we pay is changing and what the future could hold...
HOW WIDESPREAD ARE CONTACTLESS CARDS IN THE UK?
By the end of 2017, there were nearly 119 million contactless cards in circulation, with 78% of debit cards and 62% of credit cards being contactless.
Nearly two-thirds (63%) of us now use contactless payments, the research found.
Millennials, aged 25-34, are the most likely to use contactless, with more than three-quarters (77%) of this age group making contactless payments in 2017. And while people aged 65 and over are less likely to use contactless than younger generations, more than half in this age group did make contactless payments in 2017.
WILL DEBIT CARD USE CONTINUE TO INCREASE?
Yes, according to predictions. Over the coming decade, debit card payments are expected to see a further surge.
UK Finance expects to see a 49% increase, with 19.7 billion payments in 2027, driven by the growth of contactless payments, online shopping and more businesses being able to accept card payments. There are also expected to be 6.4 billion cash payments in 2027.
HOW WILL TECHNOLOGY CHANGE THE WAY WE PAY IN FUTURE?
The choice of how we pay is widening. Barclaycard has recently embedded contactless chips into watches and is currently working with brands to embed its contactless payment chip system – bPay – into everyday products, to allow people to pay quickly and easily.
Adam Herson, business development director, Barclaycard Mobile Payments, says: “Contactless payments have become the de facto payment type of choice for millions of consumers. These are now used across transport systems and by the vast majority of retailers – and shoppers love them because of the speed, ease and convenience they bring.
“More recently, we have seen a surge in the use of wearable and mobile payments, creating new, exciting opportunities for both shoppers and brands. Consumers are increasingly able to match their payment accessory or device to their lifestyle or fashion taste.”
Looking ahead, Alison Sagar, head of consumer, PayPal UK, says: “There is more change to come. Payments are constantly evolving, and we will see more changes in the next five years than we have seen in the last 50. Today, the vast majority of consumers are carrying incredibly powerful computers in their pockets wherever they go.
“We are only just beginning to scratch the surface when it comes to smartphone technology and the potential of smartphone apps to transform the future of money.”
SO WHERE DOES CASH FIT IN?
There’s still a place for cash – for many people, it’s an essential way of getting by day to day. UK Finance says rather than being a “cash-free” society over the next decade, notes and coins will continue to be valued and preferred by many. Cash is still expected to be the second most frequently used payment method in 2027 behind debit cards.
Many still rely on cash for their day-to-day needs. During 2017, 3.4 million consumers hardly used cash at all. But at the same time, a significant number – some 2.2 million – predominantly used cash to shop.
Gareth Shaw, a money expert at Which?, says: “Clearly the way we shop and pay for services is changing, but for millions of people in the UK cash still plays an essential role in their everyday lives. It’s vital these people are still able to access the cash they need.”