Week 23, 2017: Changes to Consumer Payment Methods

 

Summary: The chart shows that cash remains the most popular method of payment in 2015, although following a sustained downward trend, 2015 represents the first year in which under half (45%) of all consumer payments were made using cash. The popularity of cash is expected to continue to fall, and it is anticipated that only 27% of payments will be made via cash in 2025. This average does mask variation in habits as Payments UK detail that 2.2 million UK consumers rely almost entirely on cash and some 2.7 million almost never use it. Card payments across all types have increased, particularly debit cards, the use of which exceeded 10 billion transactions for the first time in 2015. This has been driven not just by the more widespread ownership of debit cards and increased acceptance of cards by even small retailers, but also by the surge in online shopping. The machinery required for contactless payments has become more widespread and cheaper, allowing retailers to accept ever smaller transactions via this method. By 2021 debit card use is anticipated to exceed cash use, and by 2025 card payments (contactless, debit and credit) will account for 20.9 billion transactions. Direct debit transactions remain fairly stable. The modest growth seen here is attributable to growth in household numbers and population. The report from which these stats are drawn did however detail that direct debit use is more sensitive to economic stability and consumer confidence as households tend to reign in automatic payments like this when budgets are squeezed.

What does the chart show? This chart displays the total number of transactions in billions using each payment method across the United Kingdom. The blue bars represent the actual data from 2015, and the orange bars show the number of transactions per method projected for 2025.

Why is the chart interesting? The rise in contactless payments is quite marked, with contactless transactions totalling 2.9% of all transactions in 2015, and rising to 20.2% of 2025 transactions. This is also related to the expansion of mobile payments, such as Apple-, Samsung- and Android Pay systems which free consumers from the use of the physical cards. Cities are at the forefront of the drive to kill cash, there are indeed a handful of London cafés and shops now refusing to take cash altogether. Perhaps less in the UK than globally, the move toward a cashless society does raise fears of the exclusion from mainstream commercial life of a portion of society. People such as street vendors, buskers and those who Mastercard CEO, Ajay Banga terms ‘the unbanked’ are disproportionately on the lowest incomes and female. This is an estimated 2.5bn people worldwide who Banga fears may end up ‘creating islands where [they only] transact with each other.’.