Beginning of the end for cash? Cards now UK's preferred payment method

The prospect of living in a cashless society has grown steadily for decades but it might have now reached tipping point, after cards became Britain's number one payment method for the first time.

According to data released by the British Retail Consortium (BRC) on Wednesday (12 July), cards now account for over 50% of payments processed in the UK for the first time. The landmark achievement was largely driven by a boom in contactless payments, which now account for approximately a third of all payments, compared with 10% in October 2015.

The so-called "tap and go" cards were introduced a decade ago in the UK and after a somewhat unimpressive start they appear to have finally won over British shoppers. An increase in the number of stores accepting "tap and go" payments has also contributed to the sharp rise in popularity of contactless cards.

The report found almost two-thirds of staffed payment terminals in shops now accept contactless cards, compared with less than 50% a year ago. It marks an impressive shift in shopping habit, as contactless payments were largely confined to coffee and sandwich shops when the system was first introduced in 2007.

According to industry data, there are now 108 million of contactless cards in issue in the UK.

The BRC added that 2016 was also the first time debit cards overtook cash in terms of popularity, accounting for 42.6% of all transactions, while cash and coins made up 42.3% of the total, after slipping five percentage points.

"One of the biggest drivers has been the increasing use of contactless payments," said the BRC.

However, not everyone is convinced becoming a cashless society is a foregone conclusion.

Last month, the Bank of England's chief cashier Victoria Cleland pointed out reports about the "death of cash" are much exaggerated.

"Many people are surprised to learn that demand for cash continues to grow. The value of Bank of England notes in circulation peaked in the run-up to Christmas 2016, reaching over £70bn for the first time - an increase of 10% on a year earlier."

The bank cashier adds that in Britain today 2.7 million people, or 5% of the population, rely almost entirely on cash to conduct their day-to-day business.