News & Views - Savantor

Debit card transaction volumes overtake cash sooner than predicted

Monday, 16 July 2018

The latest report produced by UK Finance, ‘UK Payment Markets 2018’, identifies the most recent trends affecting all types of payments in the UK, as well as providing forecasts for the next ten years.
According to the report, 38.8 billion payments were made in the UK in 2017.
What is of particular interest is that during the last quarter of 2017, debit card usage overtook cash usage for the first time as the most frequently used payment method in the UK. Apparently this was several months earlier than previously predicted by UK Finance - the forever increasing popularity of contactless is thought to be mostly responsible for this.
The majority (98%) of UK consumers now hold a debit card; in 2017 there was a 14% increase in debit card transactions compared to the previous year, up to 13.2 billion debit card payments for the year.
Credit card transactions saw a similar percentage growth (13%) over the previous year, to 3.1 billion payments in 2017. However credit cards are held by less than two thirds of the population, with only 64% of consumers in the UK holding a card.
Over the next ten years, debit card payment volumes are forecast to grow by more than any other payment method, increasing by 49% to 19.7 billion payments in 2027. Contactless payments will help drive this, together with the continuing popularity of online shopping as well as increasing card acceptance amongst all businesses and in particular small businesses wanting to enjoy the growth in contactless usage.
Credit card volumes are also predicted to increase, reaching 3.9 billion by 2027. The growth in credit cards is forecast to be very much tied to the state of the economy and how much consumers are prepared to take on unsecured debt.
The number of contactless payments made in the UK increased by 97% during 2017 to 5.6 billion payments. By the end of 2017 there were nearly 119 million contactless cards in circulation in the UK with 78% of debit cards and 62% of credit cards having contactless functionality.
Cash payments continued to decline in 2017, falling by 15% to 13.1 billion payments. However, this still means that cash was used for over a third (34%) of all payments and was the second most frequently used payment method, just behind debit cards. The increasing use of debit cards, in particular contactless, is seen as the main cause for the decline in cash as a payment method.
During 2017 there were 3.4 million consumers who virtually did not use cash at all, yet there were also still 2.2 million consumers who predominantly used cash when shopping.
Whilst the number of cash payments is expected to continue to fall over the next 10 years, as a payment method it is still forecast to account for 16% of all payments, remaining the second most frequently used means of payment.
To summarise, changes in consumer preferences, innovation in payment methods and technological developments have caused significant changes in the UK’s payment market over the last decade and had a considerable impact on consumer payment behaviour. Rather than it becoming cash-free over the next decade, the UK seems to be developing into a market where cash is becoming less important than it once was, but nevertheless remains the payment method of choice for many.

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