The number of cash payments made in the UK fell by 35 per cent in 2020 according to the annual Payment Markets Report by the UK Finance report, as the pandemic lockdowns accelerated the changing payment preferences.
As people were being encouraged by many shops to pay by card or contactless instead of cash, there were 13.7 million consumers who used cash only once a month or not at all, a significant increase from 7.4 million consumers the previous year.
Cash still remains the second most frequently used payment method behind debit cards, used for 17 per cent all payments in the UK. Significantly, there remained 1.2 million consumers who mainly used cash for their day-to-day spending during 2020.
Contactless now accounts for more than a quarter (27%) of all UK payments, as the number of such payments has increased by 12 per cent to 9.6 billion, continuing a trend of past years. In the last four years contactless payments have jumped from being just seven per cent of all payments to 27 per cent.
Supermarkets were the most popular place to use contactless payments in 2020, accounting for 41 per cent of contactless payments, as the stores remained open during the lockdown periods. The increase was also caused by consumers being encouraged to reduce contact by using cards, and contactless payments in particular, during lockdown.
The share of card payments in 2020 has increased to 59 per cent, up from 56 per cent in 2019. The report has also shown the strong growth in the use of mobile phones and smart watches to make payments. Nearly a third (32%) of the adult population were registered to use mobile payments by the end of 2020.
The report, an analysis of all forms of payments over 2020, however showed the impact of the lockdowns, with the total number of payments in the UK declining for the first time in six years, falling by 11 per cent to 35.6 billion. The number of consumer payments fell by 13 per cent to 30.7 billion as people had reduced opportunities to spend money during the pandemic.
“The pandemic resulted in some marked changes in payments behaviour and while it’s too early to say whether they are permanent changes, we did see an acceleration in some existing trends such as the reduction in cash usage and the growth in contactless and mobile payments,” David Postings, chief executive of UK Finance, commented.
“There remains real diversity in the way in which people choose to conduct their day-to-day spending and the banking and finance industry is committed to helping customers make payments in a variety of different ways.”
