Contactless smartphone payments are becoming more popular and threaten to replace cash soon.
The number of contactless payments doubled last year while cash withdrawals plummeted by 75%, according to research by a money comparison web site.
Last year, the doubling of contactless payments rose to 1.4 billion, which represents 30% of all purchases in the UK compared with 16% a year earlier.
The survey also revealed shoppers use contactless payments 20% more than they use cash and that smartphones are fast becoming the nation’s favourite way to spend money.
The payment revolution is fuelled by young adults who make many more contactless purchases than the over 55s.
Sally Francis, a money expert at MoneySuperMarket, said: “Cards have threatened to overtake cash as our favourite way to spend in modern day Britain for some time now, but what’s more surprising is the growing role mobile phones are playing in how we’re paying.
Leading cashless society
“With the latest industry research suggesting over half (55%) of all transactions are non-cash, it’s clear that the nation’s relationship with cash has changed.
“While we don’t see coins and paper money disappearing overnight, it’s clear that advances in payment technology – such as being able to pay for items with facial recognition – means we can expect the nation’s spending habits to keep evolving with the times.”
Despite the boom in contactless transactions in Britain, Sweden reigns as the world’s leading cashless society.
The government says less than 1% of purchases in the country were made with coins or notes in 2016. The average across the European Union and US is 7%.
Many businesses have a sign at the door stating cash is not accepted.
Financial freedom
Smartphone payment system Swish is a popular app used by more than 5 million people out of the country’s population of 10 million. The app makes phone-to-phone money transfers easy.
Other research by insurance company SunLife has seen a huge swing in the way the over 50s pay for incidental everyday shopping.
Cash payments have dropped by 51%, while using a contactless card has climbed by 60%, debit cards by 350% and credit cards by 1050%.
“The over 50s are enjoying more financial freedom, but they are exercising that financial freedom by embracing the technology that allows them to make the purchases they want, when they want,” said SunLife marketing director Ian Atkinson.
“With more than 100 million contactless cards in circulation, its use is only going to grow with UK Finance predicting a fourfold increase in the next ten years. People over 50 have shown that they are embracing the change – they are clearly a group ready to move with the times.”
