Cash payments will account for less than half of all retail transactions in the United Kingdom by 2015 as consumers increase their use of payment cards, especially debit cards, according to a UK Payments Council report.

The council based the findings in its report “The Way We Pay 2010” on a yearly survey given to a panel of consumers representing various socioeconomic backgrounds.

Technology and cultural changes seem to be the driving force behind the rise in card use, which is reducing consumers’ use of paper checks and cash, the council notes in the report. Though credit card use has fallen since 2005 partly because of the recession, debit cards now are the most popular payment type, the council says.

Last year, UK consumers used debit cards to spend 264 billion pounds (US$409 billion or 301 billion euros), up from 64.7 billion pounds in 1999. At the end of last year, some 80 million debit cards were on issue, up from 46 million a decade earlier, the council notes.

Credit card spending rose 74%, to 132 billion pounds last year from 76 billion pounds in 1999. Cash spending increased only 7%, to 265 billion pounds. Additionally, only 0.8% of retail transactions used paper checks last year, the council reports. The report did not note the specific cash spending in 1999, and it did not say how much UK consumers spent using checks.

The UK is in the midst of a “plastic revolution,” a council spokesperson tells PaymentsSource.

Debit cards are “steaming ahead,” the spokesperson says. In fact, debit card payments increasingly have displaced traditional payment methods, including credit cards, the council notes. Additionally, more than three-quarters of adult consumers have at least one debit card and use it an average of 158 times per year, or almost every other day, the council says, noting a decade ago UK consumers used their debit cards on average just more than once per week.

Because consumers do not always carry cash, they now use their debit cards for almost every transaction, include small purchases from grocery or convenient stores, the council spokesperson says. With a debit card, consumers have more flexibility when they are shopping–they do not need to know exactly how much cash they will need for a specific shopping trip, the spokesperson notes.

Some industry experts, however, disagree that most consumers use their debit card for all purchases. In some areas, such as Asia, mobile phones and other devices are replacing wallets, but “most consumers in places such as the United States and the UK still carry wallets,” Megan Bramlette, managing associate for Westbury, N.Y.-based Auriemma Consulting Group, tells PaymentsSource. Because of this, some consumers still may have cash with them, especially when buying smaller items, she contends.

Credit cards also are replacing cash, but at a slower pace, because the credit card market is much more competitive than the debit card market, the council’s spokesperson says.


Though cards are replacing cash use for retail purchases, the “biggest barrier is that not all merchants will be ready for this,” Bramlette surmises. The functionality and structure is there from the processors, issuers and acquirers, but “merchants will still have to deal with acceptance and costly interchange fees, she adds.


The council agrees that cash use will not disappear any time soon. But the payments landscape is changing and is adapting to new technology, the spokesperson notes

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