Save the date: 2021, the year debit cards overtake cash to become the UK’s most frequently used payment method.
That’s right, cash will be forced to hand over its title as the most popular payment method to debit cards in the next five years, according to a new report from Payments UK, the trade association for the payments industry.
The new report, titled UK Payment Markets 2016, which provides an overview of current and future payment behaviour in the UK, will reveal over 72,000 payments were made every minute in the UK in 2015 by consumers and businesses. This adds up to more than 38 billion payments. By 2025 this will go up to just under 80,000 (79,044) payments every minute. That’s a staggering 42 billion in the year, with increasing card usage playing a major part.
Cash still popular..
Proponents of newer payment methods shouldn’t be pouring out the champagne just yet as cash is still big. It was still the most popular payment method in 2015, accounting for 45.1% of all payments. As we know, non-cashless transactions overtook cash in 2014.
…But not for long
By 2025, it’s predicted that notes and coins will account for just one in four (27%) payments, with 2021 being the major tipping point. That’s when it’s forecasted there will be 14.5 billion debit card payments compared to the 13 billion cash payments.
Contactless is the driver
In 2025, Payments UK predicts that credit, debit and charge cards will account for more than half of all payments made (50.2%) – a change that will be driven primarily by contactless.
In 2015, the average UK adult made 20 card payments per month in 2015, of which around one in 10 were contactless. By 2025, the same average UK adult is expected to use a debit, credit or charge card virtually every day (30 times a month) and just under half of these transactions – 14 per month – will be contactless. Payments UK forecasts that many of these payments may be made using a mobile phone, without consumers needing to carry their plastic cards with them.
Faster Payments Service
People increasingly turning to online and mobile banking is predicted to translate into growth of the Faster Payments Service, which is used to process these payments.
In 2015, over 66% of adults regularly used online banking, and a third used mobile banking. According to Payments UK, this contributed to 903 million one-off and forward-dated Faster Payments being sent, with a further 344 million standing orders processed using the service. These payments will more than double over the next 10 years, with 1.9 billion one-off and forward-dated payments forecast to be made in 2025.
‘Consumers ready to reassess how they make payments’
Payment UK’s chief economist, Adrian Buckle, says today’s consumers are more than willing to to reconsider their payments and search try newer ones that could be much more convenient and cost-effective.
“Technology, consumer choices, business behaviour and market developments are major factors in how we choose to pay, and will have a major impact on how things change over the next ten years. This year’s UK Payment Markets report reveals a picture of consumers and businesses more ready than ever to reassess how they make payments and make the most of the convenient, cost effective and innovative options that are available,” he said.
In this guest post, Anthony Walton, CEO of Iliad Solutions, explores how businesses and regulators can increase the safety and efficiency of transactions, and introduce technological advances into the system.
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