Digitization prevails: British consumers prefer contactless payments

The trend towards a cashless society continues inexorably in the United Kingdom. According to a recent study by UK Finance and the consulting firm Accenture, one-third of Britons paid contactlessly via mobile phone at least once a month last year, while the share of cash payments further declined. Digital wallets such as Apple Pay and Google Pay are enjoying growing popularity, partly due to their increased security and more flexible spending limits. For the year 2023, it was calculated that 34 percent of British consumers used mobile contactless payments monthly—a significant increase compared to previous years. At the same time, the proportion of British adults who have registered a digital wallet rose to 42 percent in 2023, up from 30 percent the previous year. This highlights the rapid shift towards digital payment methods in the population. Nonetheless, cash remains a part of the payment system, albeit to a decreasing extent. In 2023, cash payments accounted for 12 percent of all transactions, a drop compared to 14 percent in 2022. The dominant payment method remains the debit card with chip-and-pin function, responsible for half of all payments. Contactless payments, both by card and mobile, follow closely with 38 percent. The ongoing decline aligns with a long-term trend, even though cash usage temporarily increased in 2022. Rising living costs had prompted many consumers to better control their spending through cash payments. A key factor for the increasing popularity of digital wallets is their biometric security features, which, unlike contactless plastic cards, do not have a £100 transaction limit. "Just as credit and debit cards once offered a more seamless option than cash or checks, digital wallets are quickly gaining market share," said Sulabh Agarwal, Global Payments Lead at Accenture. The impressive growth of digital wallets has also caught the attention of financial regulators. Both the Payment Systems Regulator and the Financial Conduct Authority are currently investigating the competitiveness of offerings from Apple, Google, and PayPal. David Geale, Managing Director of the PSR, emphasized the opportunities and risks that come with the growing market share of digital payment methods. Researchers assume that the popularity of cash will continue to decline over the next ten years, although the rate of decline may slow. Critics, however, emphasize the role of cash in crisis situations. John Howells, CEO of Link, pointed to the resilience of the digital payment system but also highlighted the importance of cash during IT outages.