Half of all UK payments now use debit cards

By Alex Rolfe September 15, 2023 Mobile payments

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The total number of UK payments (consumer and business) in the UK last year increased to 45.7 billion, up from 40.4 billion in 2021.

Payments made by businesses accounted for 13% of the number of all payments made in the UK during 2022.

However, due to the high average value of business payments, these accounted for 8% of the total value of payments made.

Consumers made 87% of all payments, accounting for 18% of the total value of payments. The split of this total across various payment types is shown in the graph below:

UK Finance’s data suggests that there has been a shift towards an increasing number of transactions that are each worth a lower amount, without necessarily increasing the overall amount spent.

Anecdotal evidence suggests that people are, for example, making more smaller visits to supermarkets rather than doing one large shop.

In addition, as more people work from home, purchases of travel cards have fallen significantly as people instead pay for individual journeys – therefore increasing the number of travel payments.

Credit and debit cards

Debit cards remain the most popular payment method and volumes increased by 18% during the year to just over 23 billion payments (2021: 19.5 billion). As a result, for the first time, half of all payments in the UK were made using debit cards.

Payments made using credit cards increased by 19 per cent from 3.4 billion in 2021 to 4.1 billion in 2022.

Contactless

Across both debit and credit cards, there were 17 billion contactless payments, a 30% increase on the 13.1 billion made in 2021.

Contactless payments were used extensively throughout the UK in 2022, with 87% of people making contactless payments at least once a month or more frequently.

The average value of contactless payments continued to grow in 2022 at £15.10, up from £12.66 in 2021.

Mobile Wallets

As well as using contactless cards, other devices such as mobile phones are increasingly being used to make contactless payments.

30% of the adult population reported being registered for at least one mobile payment service in 2022, with younger people more likely to be making use of mobile wallets.

Overall, use of these services is still lower than use of contactless cards, but they appear to be growing in popularity and it is likely that mobile payment methods will see strong growth in the future.

Cash

The long-running trend in cash has been one of continued decline, although it remains the second most frequently used payment method.

The total number of cash payments made in the UK during 2022 increased to 6.4 billion, (2021: 6 billion).

Due to the higher total volume of payments, the share of payments made using cash still fell slightly, from 15% to 14%. A decade ago, 54% of all payments were made with cash.

Growing fears about inflation and the rising cost of living have meant some people are making greater use of cash as a way of managing budgets.

There were 21.6 million people who used cash only once a month or not at all in 2022, down from 23.1 million the year before.

There were 0.9 million consumers who mainly used cash in 2022, down from 1.1 million in 2021 and 2.2 million five years previously in 2017. These consumers use cash when doing their day-to-day shopping, although the majority still use other payment methods to pay their regular bills.

Buy Now Pay Later (BNPL)

Around one in eight people in the UK (12%) reported using BNPL services to purchase something during 2022, the same proportion as in 2021.

Those aged 25 to 34 reported using BNPL most, with almost one in five adults in this age group (18 per cent) using it in 2022. 8% of people aged 65 and over reported using BNPL, which was up from 4% in 2021.

Forecasts to 2032

Over the next decade, UK Finance expect to see a continuation of current trends, with debit cards becoming ever more popular and cash usage falling as shown in the graph below.

It forecasts debit card payment volumes will increase to over 27 billion, which will likely be driven through contactless payments, online shopping, and the ever-increasing levels of card acceptance among businesses of all sizes.

Meanwhile, it expects the number of cash payments to continue to fall in the long run as the cost of living crisis eases, consumer confidence returns and consumers continue to turn to alternative payment methods.

The rate of decline is expected to slow as use is concentrated among those who strongly prefer to use cash. UK Finance expect there to be around 3.3 billion cash payments in the UK in 2032, accounting for around 8% of all payments.