Number of people using ‘primarily’ cash RISES as Crowdstrike outage highlights risk of card reliance

Britons have become less fond of cash in recent years, opting more often for digital wallets and contactless payments.

A new report from UK Finance shows that almost four in 10 adults in the UK were living largely cashless in 2023.

The number of cash payments fell to six billion last year. Cash represented only 12 percent of the 48.1 billion payments recorded last year.

While many adults in the UK are now largely cashless, the number of people using mostly cash will rise to 2.6 per cent of the population, or 1.5 million adults, by 2023. This is the first increase since 2019.

UK Finance attributed this to the cost of living crisis, with some claiming they could stick to their budget better by using physical cash.

Debit cards are the most popular payment method, accounting for 51 percent of all payments in 2023. Nearly four in 10 payments in the UK were contactless in 2023.

Britons have also switched en masse to digital wallets, according to separate data from card issuer Marqeta.

In the past seven days alone, 80 percent of UK consumers surveyed said they used contactless payments.

And 68 percent of adults say they would happily leave their wallets at home.

The 6 billion cash payments in 2023 offset the 2022 increase to 6.4 billion cash payments. In 2022, cash accounted for 14 percent of all payments, marking the first increase in cash payments in a decade.

Cash remains the second most used payment method in the country, although the number of payments varies slightly by age group.

According to research by the Financial Conduct Authority, around three million people rely on cash.

The FCA found that people on low incomes (a household income of less than £15,000 a year) and with few digital capabilities or access to money rely most heavily on cash.

Being digitally excluded, which is measured by an individual’s limited digital skills or poor digital access, makes someone more than four times more likely to rely on cash than someone who is not digitally excluded.

Someone in a low-income household is almost three times as likely to rely on cash, while someone who is unemployed is almost twice as likely to rely on cash.

Adrian Buckle, head of research at UK Finance, said: ‘Consumers have a huge amount of choice when it comes to the way they pay, but we’re certainly seeing the popularity of cards and contactless payments continue.

‘Mobile contactless payments are growing rapidly, with a third of adults now making them at least once a month. However, the number of payments could increase further.

‘This doesn’t mean we’re heading towards a cashless society. Cash is still the second most used payment method in the UK, although we’re using it less overall and more people are living largely cashless.

‘We predict that the trend of a decline in the use of cash and a growth in certain other payment methods, such as cards and faster payments, will continue over the next decade.’

Cash remains vital when systems fail

According to experts, an increasing reliance on contactless payments could leave customers vulnerable in the future.

Last week, a CrowdStrike software update caused a global IT outage.

On top of grounding aircraft and canceling operations, banking and payment systems were also shut down, with some customers finding they could not make card payments in stores or access mobile banking.

In cases like these, cash can remain an important lifeline for many, even when digital payments fail.

John Howells, CEO of ATM operator Link, said: ‘People continue to choose new ways to pay and cash is being used less and less. But it remains vital for millions of people – even as data predicts cash will account for just six per cent of payments in a decade – it is crucial when other systems fail as we saw with the outage last week.

‘Despite people moving away from cash, £1.6 billion a week is still spent across our network. We remain absolutely committed to ensuring people have free and easy access to cash on the high street.’

The digital payments industry is confident that the outage will not impact the acceptance of virtual wallets.

Marcin Glogowski from Marqeta said: ‘What we are seeing is that UK consumers are increasingly opting for direct, digital financial options that suit them.

‘Rather than consumer confidence being shaken by the recent IT outage, I expect consumers to embrace new, innovative financial options more often, such as digital banks, integrated financing and faster access to payroll programs.’

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