Notes and coins will account for just six per cent of payments within a decade, banking body UK Finance has forecasted citing a study, warning that millions of Britons could be left behind as the shift to a cashless society accelerates.
According to the recently released study, more than 23 million people in the UK used virtually no cash last year, sharply up from 13.7 million consumers the previous year. Debit cards were the most-used method during 2021, accounting for 48 per cent of all payments and reflecting the continued growth in popularity of contactless cards.
The number of cash transactions fell by 1.7 per cent last year, though it remained the second most commonly used method, accounting for 15 per cent of payments.
UK Finance said that the number of people turning their backs on cash surged in 2021 as many businesses went card-only during the pandemic, or stopped accepting cash for a time. There are also indications that some consumers avoided using banknotes and coins for fear they might transmit Covid.
The number of people using virtually no cash has grown rapidly- in 2018 it was 5.4 million people and in 2016 it was 2.9 million. At the same time, 1.1 million consumers used mainly cash for day-to-day shopping, according to the 2021 data.
UK Finance said it expected cash usage to continue to fall. It forecast that by 2031, notes and coins would account for only 6 per cent of all payments made in the UK.
The study also mentions the increasing popularity of buy-now-pay-later credit as almost 12 per cent of people used this to buy goods last year. Younger people were more likely to use the controversial form of credit than older ones.
“Rather than the UK becoming a cash-free society over the next decade, the UK will transition to an economy where cash is less important than it once was but remains valued and preferred by many,” The Guardian quoted a spokesperson as saying.
The organisation, however, acknowledged that some people found physical cash useful for budgeting, adding, “Given the rising cost of living, this may impact people’s use of cash over the coming months.”
However, other data indicated cash is making a comeback as a result of the cost-of-living crisis, with many under-pressure households returning to notes and coins to help them budget.
This month the Post Office said its branches handled a record £801m in personal cash withdrawals during July, an increase of almost 8 per cent on June, and 20 per cent on the July 2021 figure.
