Bye Bye Cash the Card is Now King
Cash and cheque have long been the main means of payment until as recently as forty years ago, when innovation in the way we pay really started to explode. Real change started in the 1960s when the first credit card was introduced in the UK, bringing about new and exciting services for customers. While online and mobile payments are undoubtedly a rapidly growing industry and arguably the key to the future of commerce, cash and card payments are still the dominant force right now.
Consumers across the UK collectively spent more than £19,000 every second using their cards last year. A record £600.3 billion was spent domestically and overseas using UK-issued debit, credit and charge cards, marking an 8.2% increase on the previous year. Some 31.6 million card payments were made every day in the UK last year, which is more than double the 15.7 million a day in 2004.
Card versus cash usage
Cash was overtaken by other payment methods for the first time last year, according to figures – but it still remains king with consumers, despite innovations that make it easier to pay online and by card. The Payments Council said businesses, consumers and financial organisations together made 18.3bn cash payments during the year, making up 48% of the number of transactions, versus 19.8bn non-cash payments.
While 1.6 million consumers predominantly used cash, representing 3.1% of all adults, there were 2.3 million consumers who rarely used it. Age is clearly a factor, with nearly 40% of those who depended on cash aged 65 or older, while half of those who used it infrequently were aged under 35. This could be due to a generation divide, with consumers aged over 65 who remember living in a cash dominated world, compared to millennials, many of whom have grown up with other payment options.
Surge of contactless
The use of contactless cards to make payments has continued to gain monthly momentum in the UK. Consumers made almost 20 million contactless transactions across the UK in May 2014, an 18% increase on April 2014 alone. As of November 2014, 55.9m contactless cards had been issued and contactless payments accounted for £302.7m of spending.
Visa Europe’s data also shows that in addition to increased usage by consumers and greater issuing of contactless cards from banks, the UK’s top 30 retailers are helping to drive use of the payment method. The top 30 retailers accounted for 67% of all contactless payments in May 2014.
Fear of Fraud
One of the main reasons why online payments are not currently the preferred method of payment is a fear of fraud. Many people worry that their identity may be stolen online, and 60 per cent of smartphone users have no malware protection on their devices, leaving them vulnerable to cyber criminals. This discourages them from turning to ecommerce, instead favouring the alternatives of card payments or simply cold, hard cash.
UK cardholders are not financially liable for fraud on their cards, and so using a card to make a payment provides you with extra protection if things go wrong – protection that you don’t necessarily have if you pay by cash. However, being a victim of fraud can be inconvenient, scary and time consuming trying to rectify, so it’s best to be sensible and use caution to prevent this happening in the first place.
In an age where payment options are becoming more varied and diverse, from bitcoin to m-payments, to old school cash and cheque, card payments are continuing to dominate the industry. However, with the emergence of mobile payments how long will this last? Do you have an opinion, if so we would love to hear it.