(qlmbusinessnews.com Thurs, 14th Sept, 2023) London, UK —
Cash payments, which have been steadily declining for the past decade, saw a surprising uptick last year as consumers grappled with rising prices. However, this increase in cash usage remains dwarfed by debit card transactions, which reached their highest-ever level, constituting half of all payments made.
Many consumers have expressed a preference for managing their finances with cash. Nevertheless, UK Finance, the organization that compiled this data, anticipates a decline in cash usage in the coming years once the current financial strain subsides.
Even amid the pressures of the cost of living and the transition out of lockdowns, nearly 22 million individuals only used cash once a month or not at all in the previous year. This figure stands in stark contrast to the under one million people who primarily relied on cash.
Debit cards continue to be the preferred mode of payment for most individuals, particularly for low-value purchases in stores, where contactless payments have become commonplace. The average amount spent per contactless card transaction was £15.10.
Debit card usage surged last year, accounting for half of the 46 billion payments made by consumers and businesses, according to UK Finance. Among consumers, debit cards featured in 57% of transactions.
The rise in debit card usage can partly be attributed to the shift towards hybrid working, where individuals commute to the office on some days while working remotely on others. People are visiting their workplaces less frequently but making more payments for transportation. The purchase of annual or monthly season tickets declined, with individuals instead opting for debit card payments for individual journeys. Payments made through cards linked to smartphones and smartwatches were also included in this total.
Anecdotal evidence suggests that people were making more frequent trips to supermarkets, buying smaller quantities each time, rather than conducting one substantial weekly shopping trip.
To cope with limited budgets amidst rising prices, the number of cash payments increased by 7% last year compared to 2021, reaching 6.4 billion transactions. While cash remained the second most popular payment method, it constituted only 14% of the total, trailing significantly behind card payments.
Adrian Buckle, Head of Research at UK Finance, commented, “There is a wide variety of payment methods available in the UK, each providing specific benefits to the people using them. During 2022, we saw increased use of contactless, online banking, and mobile payments, although cost-of-living challenges meant that some people preferred to use cash to help with their budgeting.”
In Bromley, southeast London, Sarah Maxwell-Scott and Debbie Clark shared differing preferences for payment methods. Maxwell-Scott, an accountant, favored card payments, citing convenience as a primary reason. On the other hand, Clark, a retail assistant, expressed a preference for using cash because it offers more control over expenditures.
Cheque usage continued its decline, with the average person writing one less cheque than once every two years. Many banks have stopped automatically issuing chequebooks to customers. Although cheques are on a managed decline, efforts have been made to safeguard access to cash for those who rely on it.
In August, the Treasury announced that banks could face fines if they failed to provide free access to cash withdrawals for consumers and businesses. The policy mandates that free cash withdrawals and deposits must be accessible within one mile for urban residents or three miles for those in rural areas.
Graham Mott, from Link, which oversees the UK's cash machine network, emphasized that millions of individuals are turning to notes and coins during challenging economic times. The initiative aims to ensure that every high street has free cash access, replacing machines where the last one closes. This effort will continue as long as there is a need for cash.
The Post Office network reported the highest number of cash transactions on record between June and August. Many of its counters are being utilized by individuals who prefer cash, especially in areas where bank branches have closed.
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