How we pay in the UK: contactless and cash

ATM

As the payments industry is prone to hype, it’s worth keeping a tab on how people are actually paying. Here we look at the latest data from two payment methods on polar ends of the payments spectrum: contactless and cash.

 

Contactless cards

In recent weeks, contactless payments have been dominating the news. Europeans made three billion contactless transactions in the last 12 months, young people think we will leave cash behind in the next few years and turn to mobiles, and restaurants and more supermarkets are switching to the tap-and-go formats.

Now the latest data from the UK Cards Association (UKCA) shows that we made 60 contactless transactions every second in February.

In total, there were 159.1 million contactless transactions, working out to about 63 a second. This is attributed to people continuing the trend of using their cards for low-value purchases.

grah representing the decreasing value of card transactions

source: UK Cards Association

The ATV on all payment cards continued to drop, falling by 28p during the month and by £3.14 over the year, to reach £44.34. Within the sectors, the average transaction value (ATV) in retail sales declined by 22p to £31.07, while the ATV for services fell by 45p to £70.52.

This trend of decreasing of ATV has been going on for the last four years as people are becoming more and more comfortable with using cards for low value transactions – with Transport for London (TFL) being an influencer, in particular.

In the world of ecommerce, the ATV of online spending is also experiencing a ‘downward trend’ as spending on all payment cards decreased by 91p to £90.99 in February.

However, contactless cards confidence is rising as the ATV reached £8.28, up by 13p on January, reaping the benefits of a higher spending limit.

Overall, there were 1.182 billion transactions using cards in February, compared to 1.071 billion in February 2015.

Overall, £52.4 billion was spent using payment cards in February, and compares to £50.9 billion in February 2015, an increase of £1.3 billion on the previous year.

Richard Koch, Head of Policy at The UK Cards Association, said:

“With more than 60 transactions taking place a second, it is clear contactless card payments are becoming ever more popular. Whether picking up a pint of milk or buying a sandwich, customers are consistently voting with their wallets and using their cards as the predominant way of paying.”

 

Cash

Whilst contactless cards had a brilliant February, the first May Bank Holiday worked wonders for the cash society as over £100 million more was withdrawn from the UK’s ATMs during this year’s May Day bank holiday weekend compared with last year, according to LINK, the UK’s cash machine network.

The total value of LINK cash withdrawals between Friday 29 April and Monday 2 May rose by £113 million (7%) from £1.603 billion to £1.716 billion, compared with the same period last year. According to the ATM network, it was the busiest ever May Day bank holiday weekend for the UK’s 70,270 ATMs.

The Friday was the busiest day for cash withdrawals as British people withdrew £620 million on that day – £27m more than last year’s Friday.

“A mixture of some long overdue good weather, a packed sporting calendar and the extra day off work that many of us enjoy meant that last weekend marked an all-time peak in bank holiday ATM withdrawals.” said John Howells, Chief Executive of LINK.

He used the figures to back up his argument that cash has not only a chance of survival, but actually a positive future ahead of it.

“Despite the many different ways to pay that we have in this country, this record for ATM withdrawals clearly shows that cash has a bright future in the UK. Indeed, with the roll-out of new plastic banknotes and the twelve-sided one pound coin on the horizon, we can confidently predict cash is here to stay.”

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