Contactless payments may seemingly be all the rage in the U.K., but they have some catching up to do to one of the oldest payments methods in the world: cash.
While a significant shift toward alternative payment forms was seen for the first time in 2014, cash continues to be the champion of payment methods in the U.K. as measured by number of transactions, with 48 percent of transactions made in cash, according to the U.K. analysis of the PYMNTS.com Global Cash Index™.
Overall, the total use of cash in the U.K. is projected to increase by 0.61 percent per year in the next four years – not exactly setting the world on fire, but not disappearing either. This growth, while modest, is, however, coming against an ever-increasing number of contactless POS terminals in the marketplace and mobile wallets that make all transaction types easier to do.
So, can cash continue to stand its ground?
Here’s a preview of the U.K. analysis:
Cash continues to be the preferred form of payment with its high transaction volume. However, the average value of a cash transaction is lower than most other payment forms. For instance, the total transaction value of cash-based payments in 2015 was £216.1 billion, which was less than half of debit card-based payments at £490 billion.
Nonetheless, the total use of cash in the U.K. is projected to increase, despite cash share’s continued drop in value. From 2000 to 2015 the total use of cash increased by 1.38 percent per year, and is projected to increase by 0.61 percent per year between 2015 and 2020.
While a decline in cash share might hint toward the demise of cash, the reality is far from it, according to Bank of England’s Chief Cashier Victoria Cleland.
“People have been predicting the end of cash pretty much since I was born … every 10 years or so they forecast it and they are wrong,” she said.
And while cash is still alive and kicking, consumer preferences for using cash in different situations has definitely changed.
Today, for instance, cash represents only 10 percent of utility bill related payments in the U.K – it holds a 52 percent share of spontaneous transactions, including purchase of goods and services at the point of sale.
To download the analysis, click below…
About the Index
The PYMNTS.com Global Cash Index™, a Cardtronics collaboration, focuses on the use of cash for making payments and as a payment method that equally plays a role with cards, checks, direct debit, and other methods of settling up between consumers and businesses. Unlike most reported estimates of cash, our proprietary data analysis focuses on the use of cash for making payments rather than hoarding.