Cash is no longer king, says study

Figures reveal debit card transactions are the most popular form of spending

Coins and notes will be used in less than half of all transactions within five years, after payments made by cash slumped from 73 per cent to 59 per cent over the past decade.

Debit card transactions are now the most popular form of spending, quadrupling to £264bn last year, a study of payment trends between 1999 and 2009 found.

The Payments Council research found that debit card payments are even dwarfing credit card usage, while the cheque continued its decline at a faster pace than expected. The council said it predicted in 1999 that just over one billion cheques would be used by individuals in 2009, but the figure in fact fell to 577 million.

Cheques are likely to be phased out completely by October 2018, but the council said that even if no action was taken, the volumes would more than halve to just 248 million in that time. "By 2050, when today's new workers have retired, cheques look set to be a historical curiosity," it said.

The future instead looks likely to be contactless cards, such as Oyster cards used on London Transport. They will allow people to pay for goods worth up to £15 without having to use a PIN. There are already 8 million of these in the UK, but the council estimates the number will grow to 30 million by 2012. Mobile phones are also likely to be used for small payments – one iPhone application already makes this possible. "By 2050, contactless could well be the norm, but it is unlikely to be on a plastic card and could very well be on a mobile phone," the report said.

However, cash still remains the most important method of payment for one-off and small transactions. Yesterday's study showed that around 21 billion consumer payments were in cash, although 80 per cent were for amounts under £10. Almost a third of money spent on goods and services was made by cash, but only 11 per cent of financial spending used notes and coins.

For regular commitments, such as bills, cash has plummeted from nearly a fifth of all payments by value in 1999 to less than a tenth last year, or from 19 per cent to 9 per cent. "Paying for things is more secure and more convenient now we don't have to keep replenishing the stock of paper and metal we drag around," the council said. "By 2050, using cash could well be a minority activity, much more the preserve of informal transactions."

While cash and cheques are less popular, debit cards have dominated the way Britons pay, with more than 6 billion purchases in 2009. Since the launch of debit cards in the late 1980s, their use has soared and there were just under 80 million cards in issue last year, up from a total of 46 million in 1999.

The council also noted that the last decade had seen internet banking put firmly on the map. A decade ago, online banking did not exist, but there are now 22 million UK adults operating their accounts over the web. Seven out of 10 younger users bank online, although only a third of over 65s access their accounts in this way, the report found.

The launch of "faster payments" between banks has helped the rise of internet banking, allowing small amounts of money to be moved instantly 24 hours a day. The council said individuals now make around 10 million one-off internet and phone payments each month.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Arts and Entertainment
musicBand's first new record for 20 years has some tough acts to follow
peopleAt least it's for a worthwhile cause
A new app has been launched that enables people to have a cuddle from a stranger
voicesMaybe the new app will make it more normal to reach out to strangers
Liam Payne has attacked the media for reporting his tweet of support to Willie Robertson and the subsequent backlash from fans
peopleBut One Direction star insists he is not homophobic
Life and Style
healthFor Pure-O OCD sufferers this is a reality they live in
Life and Style
Sexual health charities have campaigned for the kits to be regulated
healthAmerican woman who did tells parents there is 'nothing to be afraid of'
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Trainee / Experienced Recruitment Consultants

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

    Trainee Recruitment Consultant - Soho

    £20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

    Trainee Recruitment Consultants - Banking & Finance

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

    Quantitative Risk Manager

    Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...

    Day In a Page

    A roller-coaster tale from the 'voice of a generation'

    Not That Kind of Girl:

    A roller-coaster tale from 'voice of a generation' Lena Dunham
    London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

    London is not bedlam or a cradle of vice

    In fact it, as much as anywhere, deserves independence
    Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

    Vivienne Westwood 'didn’t want' relationship with McLaren

    Designer 'felt pressured' into going out with Sex Pistols manager
    Jourdan Dunn: Model mother

    Model mother

    Jordan Dunn became one of the best-paid models in the world
    Apple still coolest brand – despite U2 PR disaster

    Apple still the coolest brand

    Despite PR disaster of free U2 album
    Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

    Despite the result, this is the end of the status quo

    Boyd Tonkin on the fall-out from the Scottish referendum
    Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

    Manolo Blahnik: Flats, Englishness, and Mary Beard

    The shoe designer who has been dubbed 'the patron saint of the stiletto'
    The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

    Scrambled eggs and LSD

    Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
    'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

    'Normcore': Blending in is the new standing out

    Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
    Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

    New leading ladies of dance fight back

    How female vocalists are now writing their own hits
    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments