Cash seems to be making a comeback in the UK as payments made using notes and coins increasing for the first time in a decade, data shows.
In its annual report on the UK payments market, banking trade body the banking body UK Finance said that cash saw a slight uptick though plastic still ruled the roost in 2022. For the first time, half of all payments in the UK were made using debit cards, while the number of contactless payments jumped by 30 per cent in a year to reach 17bn.
The total number of payments across all methods increased to 45.7bn, up from 40.4bn in 2021 and £35.6bn in 2020. UK Finance said this was also due to changes to travel habits linked to hybrid working, with many people now paying for individual journeys rather than buying a season ticket.
Cash payments increased for the first time in a decade last year, rising by 7 per cent to reach 6.4bn payments, despite the fact that many businesses have gone card-only, states the report, adding that cost-of-living crisis had prompted many people to turn back to “tangible” physical money to help them manage their budgets.
Last year also brought a “big jump” in the total number of payments made using all methods, which was attributed in part to people increasingly making lots of small visits to supermarkets, and shopping around more to get good value, rather than doing one big grocery shop.
The number of people who live “largely cashless lives” – defined as either using no notes or coins at all, or using them only about once a month – saw a decline and hit 21.6 million as compared to 23.1 million in 2021.
“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,” said a UK Finance spokesperson.
“Once inflation falls and consumer confidence in the economy returns, we expect a return to the long-run downward trend in cash usage.”
Nevertheless, the banking body appears to have tweaked its forecasts for the decline of cash. Last year it predicted that by 2031 there would be fewer than 3bn cash payments made in the UK, accounting for about 6 per cent of all payments. Now it says that in 2032 there are forecast to be about 3.3bn cash payments, representing about 7 per cent of the total.