25 July 2023 – Contactless payment is the favourite payment method of the Brits, overtaking cash payments in face-to-face transactions.
The use of cash to pay for goods in stores has reduced for quite a while now. Especially during the pandemic, card payments became the safer option compared to paying with cash.
New research has revealed that contactless payments are now the number one payment method of choice for people in the UK. Cash payments meanwhile have slipped to third place.
Contactless Payments Have Overtaken Cash Payments
Digital payment provider takepayments surveyed more than 1,000 consumers in the UK to find out what their preferred payment method is when they shop face-to-face.
With 48%, almost half of all the people surveyed said that they prefer to use contactless technology. In second place, with 20%, were mobile payments such as Apple Pay or PayPal.
Only 17% of people prefer to pay with cash, meaning cash payments are lagging behind contactless and mobile payments. The use of card payment with Chip & PIN has declined with only 11% people preferring this method.
According to takepayments’ data, the use of chip and pin payments decreased by 12% between April 2022 and April 2023. This decline has probably been driven by the popularity of contactless payments, which have increased by 25% in the same period.
The popularity of contactless doesn’t come as a surprise. A report released by Lloyds Bank in September last year showed that 87% of face-to-face payments were contactless. In 2019, only 65% of these payments were made using this payment method.
The pandemic has likely accelerated the use of contactless payments. The maximum amount for these payments was raised to £100 in October 2021. It was seen as one of the safest payment options to stop transmission of the virus.
The contactless payment option is much more popular in the UK than in other large economies. In comparison, in the US only 45% of people use contactless, lagging far behind the British.
One reason why contactless is such a popular payment method is because the UK was an early adaptor of this technology. It was launched here in 2007, while in the US, it was only introduced in 2015.
When asked why contactless is the favourite payment method, 88% replied that it is the most convenient option, which isn’t really a surprise. 40% of people who said that their preferred option is contactless also said they never carry cash. With 7% saying that they didn’t even remember their PIN to draw out cash.
So it is no surprise that only 47% of the respondents said they would still spend money in a shop that only accepted cash. 13% said they wouldn’t shop in a cash-only place. 33% said they would, but they would find it a hassle.
This shows that small businesses are well advised to invest in contactless payment technology to keep their customers happy.
While it is no surprise that cash payments become less, when looking at age groups, the picture looks different. Over 55s are more likely to prefer to pay by cash, with 22% in this group naming this method as their preferred one.
The youngest age group, between 18 and 24 years, is the least likely to use cash, with only 10% saying it’s the method they prefer best.
However, in all age groups contactless is the preferred payment option. Over half of the over 55s (58%) said this is their favourite method.
The under 25s are also the group that are driving the popularity of mobile payments. 30% of 18- to 24-year-olds prefer to pay with Apple Pay, Google Pay, PayPal or other mobile payment methods. In comparison, only 5% of the over 55s prefer this option.
In colleges and universities, the popularity of contactless payments, including mobile payments, increased by 596% from 2021/22 to 2022/23, according to takepayments’ data.
What has been surprising is that the research shows that 25- to 34-year-olds are the least likely to use contactless. They are almost twice as likely to use cash than the younger age group. For 25-34s, the preferred payment method is chip & PIN, followed by digital wallet payments such as Apple Pay.
There is also a divide between the sexes, with women more likely to prefer contactless. Over half of women, 53%, prefer to pay contactless, whereas only 41% of men chose this as their preferred payment method. However, for both groups contactless came nevertheless out on top.
According to a Satista study, the reason men are less likely to use contactless is because they don’t trust it. 35% of men used this reason in the study, with only 29% of women saying they didn’t trust contactless.
Men are more likely to use Apple Pay, cash or chip & PIN than women. 14% of men named the latter as their preferred option, compared to 8% of women.
With contactless being such a popular payment option, and mobile payments on the rise, it is likely that cash payments will become rarer.