Cash payments to dwindle in next five years

| April 14, 2010 | 0 Comments

The UK Payments Council has revealed that by 2015, cash payments will be used for fewer than half of all transactions.

A 23-page report titled ‘The Way We Pay 2010’ by the Council found that card payments and cheque usage is rapidly declining, claiming “cash is king no more”.

The report found that more than three-quarters of cash transactions made at present were for less than £10.

The body which oversees the strategy on payments systems said that improved technology is making card payments simpler and quicker and even pubs and clubs have noticed an increase in card payments with just 40% of pub goers using cash.

Meanwhile, the Council believes that by 2018, one in 50 people would be paid their wages in cash, compared with one in eight in 1999.

The Council is forecasting that cash would account for 45% of transactions by 2018, compared with 73% in 1999.

Commenting on its report, Mike Bowman of the Payments Council, said: “Although cash will not disappear in our lifetime, the continuing payments revolution will make it an ever smaller part of our spending.

“The noughties have been the decade of the debit card. Especially since chip and pin, which has speeded up transactions, it has become socially acceptable to buy small items by card now too, for example in a sandwich shop or a pub,” he added.

The report comes after the UK Payments Council voted to phase out cheques on 31 October 2018, but stated at the time that cheques will not be phased out until an “accessible and acceptable” alternative payment system is introduced.

The use of the cheque book, in particular, has been in decline for many years as consumers opt for quicker payment methods.

Major retailers such as Tesco and Sainsbury’s no longer accept cheques, arguing that phasing out the use of cheques in stores resulted in quicker service and improved security for consumers.

Figures show it costs up to £1 to process a cheque – four times more than it costs to handle an electronic payment.

However, consumers groups have expressed concern for the elderly if cheques are abolished, suggesting that it will result in them hoarding cash at home.

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