Payments with physical money drop by more than a third last year

Fewer British shoppers used cash to make payments last year as the pandemic message to not handle physical money filtered through, new data shows.

But despite cash usage dropping 35 per cent and Covid derailing its use somewhat last year, it remained the second most popular way to pay.

Analysis of all forms of payments used last year show that contactless payments accelerated vastly in 2020.     

Overall, tap and go type spending accounted for 27 per cent of all payments. During 2020, the number of contactless payments made in the UK increased by 12 per cent to 9.6billion payments, according to UK Finance.

The number of cash payments made fell 35% meaning that cash payments only accounted for 17% of all payments in the UK, according to UK Finance

Contactless has become the fastest growing payment method. Over the last four years, it has jumped from just seven per cent of all payments to 27 per cent.

It is now the preferred payment method with 83 per cent of people in the UK using contactless – with no age group or region falling below 75 per cent usage. 

It was most often used at supermarkets and UK Finance data shows that 41 per cent of shoppers opted to use it in 2020, with limits increasing to £45.

In 2020, 13.7million used cash only once a month or not at all – a significant increase from 7.4million doing the same in 2019.

In spite of more people shunning cash, it still remains the second most frequently used payment method behind debit cards said UK Finance.

UK Finance said the change in behaviour to shun cash payments was accelerated by the pandemic.

UK Finance’s 2021 Payments Markets Report said that supermarkets were the most popular place to use contactless payments in 2020, accounting for 41% of contactless payments

David Postings, chief executive of UK Finance said: ‘The pandemic resulted in some marked changes in payments behaviour. 

‘While it’s too early to say whether they are permanent changes, we did see an acceleration in some existing trends such as the reduction in cash usage and the growth in contactless and mobile payments.’

He adds: ‘The increase in the contactless limit to £45 coupled with retailers encouraging its use meant that more than a quarter of all payments in 2020 were made via contactless. 

‘The use of cash fell, reflecting the fact that large parts of the economy were closed during the year, although it still remained the second most popular payment method behind debit cards.’ 

Use of mobile phones to pay for goods and services is also increasing according to UK Finance. 

Nearly a third – or 17.3million people – of the adult population were registered to use mobile payments by the end of 2020 – this is accounts for 7.4million more users reported in 2019.

However, it’s the younger generation that prefer mobile payments with 50 per cent of under 35s registered for mobile payments compared to just 11 per cent of those aged over 65.

The pandemic also resulted in people making fewer payments in 2020. 

UK Finance said that for the first time in six years, the total number of payments in the UK declined, falling by 11 per cent to 35.6billion.

Consumers, however, still accounted for making the vast majority (86 per cent) of all payments but there were fewer opportunities to spend because of the pandemic and, as a result, consumer payments fell 13 per cent to 30.7billion.

This post first appeared on Dailymail.co.uk