contactless cash payments
Europe Insights Paytech

Contactless vs Cash Payments: BusinessComparison and Barclays Uncover UK Spending Habits

In the digital age wherein almost everything can be done from our phones – including making payments – and contactless bank cards have become synonymous with the shopping experience, the time wherein consumers opted to pay in cash has seen its heyday come and go. But just how popular have cashless payments become?

In a new research report published by one-stop business comparison website BusinessComparison, the most recent data from across the globe was gathered alongside a survey of 2,000 UK adults to determine how often people pay using cash. This is in addition to which payment types are the most commonly used.

The research found that, overall, Europe had seen 180,147 million cashless payments in 2020. The continent recorded the third-highest volume of cashless payments at the time of the data being collected, accounting for 20 per cent of all global cashless payments.

In terms of the United Kingdom, the country recorded 30,914 million payments during the 12-month period, of which, 20,722 million were cashless. This made up 67 per cent of total payments for the UK. Broken down per capita, this amounted to 455.32 cashless payments per person in 2020. The United Kingdom recorded a population size of over 67 million people at the time.

From the data collected, it was clear that debit card payments were the most prominent form of cashless payment.

Traditional cash’s fallout

With cashless payments rapidly becoming so popular, what has become of traditional cash? BusinessComparison surveyed 2,000 UK adults to find out more about their cash-spending habits. Consumers were asked when they had last paid using cash, where the cash was spent, and what had prompted them to use cash rather than a cashless method.

In the UK, interestingly, the survey found that cash was still being used relatively often. 44 per cent of respondents said that they had paid in cash within the last week. A further 17 per cent used cash in the last two weeks. An additional 13 per cent reported paying in cash within the last month. One per cent of respondents had never paid using cash. Unsurprisingly, many of these respondents were between the ages of 18-24 (eight per cent).

In particular, 62 per cent of respondents from Wales had paid in cash within the last week. This was alongside 51 per cent from the North West. In comparison, 24 per cent of respondents in the North East and 20 per cent in Northern Ireland had used cash within the last month.

Hospitality remains top when it comes to cash usage

When asked where they had last paid using cash, it was hospitality that came out on top. Eleven per cent of respondents said they had been in a cafe or deli, with nine per cent spending cash in a restaurant.

Other common locations for physical cash to be spent included:

  • Charity shop (nine per cent)
  • Farmer’s market (seven per cent)
  • Pub (six per cent)
  • Butcher’s shop or fishmongers (five per cent)
So cash or cashless?

Finally, BusinessComparison wanted to know why consumers were choosing to pay using cash. For many, it was a matter of necessity. Almost 30 per cent said they had used cash as they were only making a small purchase (29 per cent), with another 29 per cent saying they were using up cash they already had on them.

Other common reasons for paying in cash included:

  • The business only accepted cash (15 per cent)
  • Technical issues meant only cash could be used (seven per cent)
  • Prefer paying in cash (17 per cent)

Notably, just 17 per cent of respondents said they prefer paying in cash. Highlighting how much attitudes towards cash payments have changed. A vast majority of respondents had spare cash to use up (29 per cent) with just under 30 per cent using cash to make small purchases (29 per cent).

Twenty-two per cent of respondents from the West Midlands said they preferred paying in cash. This was alongside 20 per cent from the East of England.

Philip Brennan, founder and MD at BusinessComparison, commented on the research: “In recent years, we’ve seen cash payments become increasingly undesirable, whether due to inconvenience or something else. Cashless payments have quickly risen in popularity to become the most predominant form of in-person payment.

“As well as highlighting the global success of cashless payments, our research shows how cash payment trends vary in different parts of the UK, with Wales and the North West making notable contributions to the growing popularity of convenient cashless payments.

“It’s clear that savvy UK consumers understand the benefits of cashless payment methods, making it essential for businesses to cater to their preferences.”

Contactless continues to grow

At a similar time to findings from BusinessComparison, Barclays published its insights. While the two come to the same conclusion: cash is not favoured as much as cashless, Barclays report takes a different approach. Rather than looking at the use of cash, it focuses on the overwhelming use of cashless.

While all sectors saw an increase in the total value of contactless transactions, spending more than doubled in the hotels, resorts and accommodation category (+101.4 per cent). Meanwhile, there was also robust growth in electronics (+97.5 per cent), bars, pubs and clubs (+91.9 per cent), restaurants (+90.5 per cent) and clothing (+82.7 per cent).

The rise of mobile wallets

There was also rapid growth in the value of mobile wallet contactless payments over the £100 card limit. These payments accounted for 4.1 per cent of the total value of all contactless transactions last year, compared to three per cent the previous year.

Adam Lishman, head of consumer products at Barclays: “The popularity of contactless payments took another leap forwards last year. The higher £100 limit, introduced at the end of 2021, really made its mark as shoppers flooded back to high streets following the easing of coronavirus restrictions. This lead to a surge in transactions. Brits are also becoming more comfortable making high-value contactless payments from their mobile. Especially as these transactions accounted for an even greater share of total contactless spending.

“While check-out-free shopping is gradually becoming more prominent, thanks to improvements in mobile technology, in the short term it’s hard to see another payment method competing with contactless when it comes to both speed and ease.”

Author

  • Francis is a journalist and our lead LatAm correspondent, with a BA in Classical Civilization, he has a specialist interest in North and South America.

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