Cash still dominant, but m-payments grow
Latest data reveals £58bn spent on entertainment, 60% more compared to a decade ago, as UK consumers nearly double spending in restaurants and cafes
The latest UK payments report,The Way We Pay, published today by the Payments Council has found cash payments are continuing to migrate to debit card, but that small cash payments are still popular. It also predicts a decline in the use plastic in favour of payments made via mobile phone.
Payment methods mature
Comparing the payment industry in 2001 to today, the report found cheque usage had continued to fall, halving every five years, hand-in-hand with a reliance on cash – particularly for regular payments and higher value spontaneous payments.
For example in 2001, 40% of home rental payments were made in cash and 43% of UK retail spending by value used notes and coins too. By 2011, landlords collected only just over a quarter of rents in cash, while only 30% of shopping was paid for in this way (with the majority of payments being under £5).
The report said that the rise of the debit card has been responsible for the decline of cash on the High Street, where debit card spending has risen almost fourfold since 2001. Meanwhile direct debits have also transformed the way we make our regular payments.
Flashing less cash, less often
It also emerged that UK consumers still make a lot of very small cash transactions (three out of five of our one-off payments) but, since 91% are under £25, it predicts contactless payment technology - which has started to become a more familiar sight at shop tills and on our cards - could revolutionise how way we pay. Currently, most contactless payments are made using a debit or credit card upgraded with the new technology, but soon mobile phones could do the job instead.
By 2021, consumer spending is forecast to be roughly 45% higher, but the use of cash is expected to have fallen 1%, and cards may be in decline by then too. As we adopt new payment technologies, this may even prove a conservative forecast.
Adrian Kamellard, chief executive of the Payments Council pointed out that someone in their thirties today will see more change in their lifetime than in the entire history of money.
The decade of mobile payments
"Even recent innovations such as payment via a mobile phone, which ten years ago some felt to be science fiction, will soon be commonplace. The 2000s were the decade of the debit card. The 2010s are likely to be the decade of the mobile phone. Just as we can’t imagine how we ever did without the internet, many people will soon wonder how we used to be so dependent on cash and cheque. Twenty years from now even cards may seem archaic."
Kamellard added: "The quiet revolution in payments has enabled the creation of whole new industries such as e-shopping, it has changed our behaviour, and it has reduced transaction costs, and increased the speed and efficiency with which we can all pay each other. The next ten years will see even faster change. It’s easy to imagine a future where we merely pat our pockets for our keys and phone. The wallet could become a historical curiosity.”