Industry News

Plastic Overtakes Cash as Preferred Form of Payment

Once upon a time, cash was king. Now, however, it appears that could all be in the past.

Once upon a time, cash was king. Now, however, it appears that could all be in the past. The rising heir to the throne, according to a survey carried out by the UK Cards Association, is plastic. All the latest stats show that consumers are paying by plastic more than ever. Whether it’s debit, credit, pre-paid debit card or contactless payment card, cash is on the way out as plastic becomes the preferred way to pay.

A New era of Contactless Payments

Whereas, in the past, we tended to use plastic for larger payments, the size of those payments has been steadily decreasing. Now we want to be able to use our cards for small everyday purchases, from a newspaper from the corner shop to a pint in the local. Fortunately, contactless payment technology is allowing that to happen.

While the survey found that British people spent £600 billion using payment cards last year – 13 billion transactions using cards in all throughout 2014 (up 12% on the previous year) – it was contactless, or ‘tap and pay’ payments that saw the biggest rise. More of these transactions took place during the first nine months of 2014 than in the previous six years in total.

There were 319 million contactless payments made in 2014 – with a combined value of £2.3 billion. A big contributor here was the introduction of contactless payments on London public transport, where it was used to pay for bus and train journeys. In fact, London commuters were responsible for one in ten of all contactless payments last year. Richard Koch, head of policy at the UK Cards Association, says: “Contactless has now firmly stepped into the mainstream. With usage soaring every month last year, we’ve seen people flocking to contactless payments as they switch away from cash.”

The rising trend in contactless payments looks set to continue with growth in wearable near field communication (NFC) technology and an increase from £20 to £30 in the limit that can be paid using contactless technology.

Plastic – Your Flexible Friend

However, debit cards remain the most popular form of payment. 48.5 million people or 91% of adults have at least one debit card. On average, each was used to make 106 payments in 2014 with spending up 10% on 2013 at £4500. This includes prepaid debit cards, which are being seen as the alternative to credit cards.

While the uptake of prepaid debit cards is highest among the young, credit cards are still popular with the older generation. 60% of the adult population have one with three-fifths of all credit cards held by people over the age of 45.

Cards Accepted Everywhere

Card payments mean big business for retailers too. In total, three out of every four pounds was spent using some form of card – up 10% since 2009. As a result, more businesses are accepting card payments with a rise of 4.2% on 2013. That said, online shopping accounts for a large portion here. Over a fifth of all shopping is now carried out online.

The UK Cards Association expects the decline in cash transactions to continue with an anticipated rise of 66% in card payments over the next ten years, including a 76% rise in debit and prepaid debit card payments.

“With more places now accepting cards, contactless payments and the rise in online shopping the large jump in card spending we saw last year looks set to continue,” says Richard Koch.

Suits Me®

Here at Suits Me® you can rest assured we will be keeping our Mastercard® card updated with all new forms of card payment technologies in order to reflect the way people want to pay and, of course, to meet the needs of our customers. For more information on Suits Me® and how you can sign up through your recruitment agency, an umbrella company or employer contact or phone 03330 151 858.

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