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Use of debit cards for payment has reached 50%

Payments made with cash rose for the first time in a decade last year, according to UK Finance, the trade association of the UK banking industry.

Its latest Payment Markets Report shows the number of cash payments during 2022 increased to 6.4 billion payments (6 billion in 2021) although the proportion of payments made using cash fell slightly from 15% to 14%.

For the first time, however, half of all payments (50%) in the UK were made using debit cards, as volumes increased by 18% during the year to just over 23 billion payments (2021: 19.5 billion).

The overall total number of payments increased to 45.7 billion, up from 40.4 billion in 2021.

The number of contactless payments increased by 30% to 17 billion, with 87% of people making contactless payments at least once a month or more frequently.

The average value of contactless payments continued to grow in 2022 at £15.10, up from £12.66 in 2021.

UK Finance’s data suggests that there has been a shift towards an increasing number of transactions that are each worth a lower amount, without necessarily increasing the overall amount spent.

Anecdotal evidence suggests that people are, for example, making more smaller visits to supermarkets rather than doing one large shop.

The report said growing fears about inflation and the rising cost of living have meant some people are making greater use of cash as a way of managing budgets.

However, there were 21.6 million people who used cash only once a month or not at all in 2022, down from 23.1 million the year before.

There were 0.9 million consumers who mainly used cash in 2022, down from 1.1 million in 2021 and 2.2 million five years previously in 2017. These consumers use cash when doing their day-to-day shopping.

In addition to data on last year the report also contains forecasts for the next decade, and it said it expected there would be a continuation of current trends, with debit cards becoming ever more popular and cash usage falling.

It forecast debit card payment volumes will increase to over 27 billion, which will likely be driven through contactless payments, online shopping, and the ever-increasing levels of card acceptance among businesses of all sizes.

Meanwhile, the number of cash payments is expected to continue to fall in the long run as the cost of living crisis eases, consumer confidence returns and consumers continue to turn to alternative payment methods. The rate of decline is expected to slow as use is concentrated among those who strongly prefer to use cash, with around 3.3 billion cash payments in the UK in 2032, accounting for around 8% of all payments.

Adrian Buckle, head of research at UK Finance, said: 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.

“Over the next decade we are forecasting further growth in the use of card and mobile payments and market developments such as Open Banking may bring further changes to the payments landscape.”