Cashless payments have been in existence in the UK since the Bank of England first introduced pre-printed cheques in 1717. However, it is only now that paying for goods and services without cash has become more popular than paying with coins and notes.
For the first time, the number of cashless transactions carried out last year outnumbered the number of transactions that did involve cash. 48% of transactions in 2014 were made with cash, according to The Payments Council, with the remaining 52% made through other methods. These figures exclude online transactions, which are of course made almost universally without cash.
While cheques may have been the start of cashless payment system (though “bills of exchange,” which are essentially an ancestor of the cheque, go back even further), this is decidedly not the favoured method of payment in the present day. Instead, electronic payment methods are the most popular way to pay without the use of physical notes and coins. In particular, debit and credit cards, including new contactless cards which simplify the process significantly, make up the majority of cashless transactions.
The Payments Council predicts that in years to come, cashless transactions will make up an even greater majority of payments made. In ten years, the Council predicts, only a third of transactions will involve actual, physical money.
The places where cash-free transactions are most prevalent are petrol stations, supermarkets and shops selling electrical goods. These are all places where people frequently spend a comparatively large amount in one go and are therefore less likely to be carrying sufficient money about their person. Meanwhile, cash payments remain most dominant in pubs, newsagents, and small convenience stores.
People are increasingly favouring cashless payments for simplicity. There is no need to ensure you are carrying enough money about your person, and no need to worry about counting out money and then receiving your change and checking it is correct. Contactless payment has further simplified the process of paying without cash, and has opened up the possibility for mobile phones and even gloves to be used in transactions in place of debit and credit cards.
Those who prefer cash, meanwhile, are often those concerned about the possibility of identity theft or of cards being used to fraudulently access their bank accounts. For these people, cash represents a kind of risk limitation as thieves can only steal as much as they happen to be carrying.
Older consumers also tend to rely on cash much more heavily than their younger counterparts. According to the Payments Council, 1.6 million consumers rely primarily on cash and most of these are over 65. 2.3 million people, on the other hand, use cash very rarely and these are mainly under 30 years of age.
