A cashless future? Card is King as cash and cheque payments continue to decline at pace
13 April 2015
- Cash withdrawals now account for just 16.6% of all current account transactions and £18.33 of every £100 spent
- The proportion of cheque transactions has fallen 20% in the last year to just 1.2% from 1.5%
- Faster payments have seen the greatest increase in popularity accounting for £15 of every £100 spent
Consumers are embracing the digital age when it comes to their spending habits, favouring card and electronic payments over the more traditional methods of cash or cheque.
According to current account customer data published today by Halifax, payments by debit card now account for over half (56.7%) of all consumer transactions and cashless payment methods have increased to 83.4% of all current account transactions.
Cash withdrawals now account for just 16.6% of all current account transactions, a reduction of 8.3% on last year, with the proportion of transactions made by cheque nosediving 20% in the last year, accounting for just 1.2%, down from 1.5%. While faster payments still only make up a small proportion of the volume of transactions (2.7%), they are seeing the fastest growth and largest increase in the average spend in £100.
It is likely that the introduction of contactless technology making card payments easier and the prominence of online and mobile banking and ‘pay a contact’ services are increasing the convenience of plastic and automated payments and supporting a move away from cash or cheques.
Spend in £100
As well as the number of cash and cheque transactions decreasing, the amount customers are spending by both of these methods through their current accounts is also on the decline.
Cash withdrawals now account for just £18.33 of the every £100 spent, a £1.82 decline since 2013. Although cheques account for around 1 transaction in every 100, their relatively high value still accounts for £8.14 in every £100 spent this way.
Direct Debits account for a fifth (£20.84) of every £100 spent and the value of faster payments has increased significantly with share per £100 increasing by 16% from 2013, driving £15 per every £100 spent being processed as a faster payment.
Nick Young, Head of Halifax Current Accounts said: “This trend away from cash is likely to go on as banks innovate and provide customers with more convenient ways to pay for their goods and we continue to see the rise of new, non-traditional entrants into the payments market. Consumers now have much more choice regarding payment methods and have adjusted their spending habits accordingly. As the number of ways to pay on debit card continues to increase, we are likely to continue to see a corresponding decline in the use of cash.”