According to research from UK Finance, the number of people in the UK using cash for day-to-day spending hit a four-year high during the recent cost of living crisis. The data revealed that approximately 1.5 million adults mainly used cash in 2023, marking the first rise since 2019. This trend was attributed to budgetary constraints, as people struggled to manage with sharply rising prices and squeezed finances.
However, the research also showed that the majority of young people paid for things using smartphones or watches, with 72% of 18 to 24-year-olds regularly using their digital wallets to make contactless payments. In contrast, just over a quarter (27%) of 45 to 54-year-olds used mobile contactless payments regularly, falling to just 8% of the over 65s. UK Finance’s Head of Research, Adrian Buckle, expects older age groups to catch up in the coming years, as mobile contactless payments continue to grow in popularity.
While there have been warnings about the risks of “shoulder surfing” thefts, and figures have shown that one phone is stolen every six minutes in London, mobile contactless payments are surging in popularity, thanks to security features such as fingerprint technology. Unlike cards, mobile contactless payments do not have a spending limit, which is an added advantage.
Although there has been a steady decline in payments using cash over the last decade, with contactless cards becoming the preferred option for everyday purchases, cash remains the second most popular payment method, after debit cards. Approximately 22 million consumers were primarily cashless last year, and 3 million people still rely on cash.
To address the situation, the Financial Conduct Authority (FCA) recently announced stricter rules to ensure banks and building societies offer access to cash. The FCA’s new rules require banks and building societies to fill gaps in cash access, resulting from branch closures, with measures such as banking hubs, ATMs, and Post Office facilities.
In conclusion, although the popularity of cash payments has declined over the years, the cost of living crisis has prompted a significant rise in cash usage, particularly among those with limited budgets, while mobile contactless payments continue to surge. The FCA’s new rules on ensuring access to cash have also come at a crucial time
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