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More than 90% of face-to-face payments are now made using contactless cards

Barclaycard
(Image credit: Barclaycard)

Card and contactless payments continued to increase in 2019, with card payments accounting for over half (51 per cent) of all payments for the first time, according to the latest UK Payment Markets report from UK Finance.

Debit cards were the most used transaction method in the UK with 17 billion payments, of which 7 billion were contactless. Consumer use of credit cards also rose during 2019, up by 7 per cent to 3.3 billion payments, driven partly by the increase in contactless credit cards issued last year with 1.3 billion credit card payments made via contactless in 2019.

The number of contactless payments across debit and credit cards increased by 16 per cent to 8.6 billion. This continued move by consumers towards these payment methods may have helped prepare customers for the changes they now face due to the coronavirus lockdown.

Digital revolution

Trends in payment habits may have also increased lockdown preparedness as supermarkets were the most popular place for contactless spending in 2019. Additionally, 48 million adults in the UK bought goods and services over the internet in 2019, as online shopping continued to increase across all age groups with nearly four fifths of those aged over 65 (79 per cent) shopping online in 2019.

Cash payments continued to decline in 2019, falling by 15 per cent to 9.3 billion payments, although cash was still the second most popular payment method in the UK after debit card. Changing retail trends, including the ever-increasing use of online shopping and the increase in card acceptance by retailers, have been a factor in both the declining use of cash and increasing use of card payments.

In addition, consumer preferences are changing in favour of using cards to make payments. The number of people who were not using cash or using cash just once a month has more than doubled in two years (3.4 million in 2017 and 7.4 million in 2019). Young people are leading the way in this respect, although there are people of all ages who rarely use cash, seven per cent of people aged 65 or older were using cash once a month or less frequently during 2019.

Remote banking increased across all age groups in recent years. Over four-fifths of adults used either online banking, mobile banking or telephone banking in 2019 compared to three-fifths of the adult population in 2009, with 2019 being the first year in which consumers made over a billion remote banking payments. 

While 98 per cent of the population had a debit card in 2019, the industry recognises that some people still wish to and require access to cash, and it is committed to ensuring access to cash remains free and widely accessible for those that continue to need it. The Community Access to Cash Pilots initiative was introduced as an industry measure to improve access, helping local areas develop and support solutions that work best for them. For vulnerable customers, UK Finance also issued guidance on making payments safely during lockdown.

Stephen Jones, CEO of UK Finance, said: “An increase in ways to pay coupled with the change in people’s payment habits may have inadvertently gone some way to prepare the nation for the impact of Covid-19 on their daily lives. With consumers already using contactless payments and remote banking more than in previous years, these technological advances have allowed many people to shop and make payments safely from home or in store.

The impact of Covid-19 may accelerate these habits for many customers; however, we are fully aware that not all customers are digitally-enabled which is why we are working flat out to ensure people have access to cash and everyday banking services remain available to help the country through these difficult times.”

Natalie Ceeney CBE, said: “In 2019 we saw a further decline in cash use of 15% – although the fact that over 9 billion payments were made in cash in 2019 shows how many people still depend on it. This UK Finance data was taken before the impact of Covid-19, which has accelerated the shift to digital payments and further challenged the viability of the cash infrastructure. It’s essential that we ensure that everyone is included in our economy, and until digital payments work for everyone, we need to maintain people’s ability to access and pay with cash.”

The Covid-19 crisis has rendered the analysis of payment trends and forecasts particularly challenging as it is not yet clear the impact on consumer and business behaviour. UK Finance says it will be monitoring the next phase of the crisis in order to determine what impact, if any, the experiences of 2020 have had on consumers’ preferences about how they pay for things.