Contactless payments drive card use as plastic overtakes cash

12 July 2017

 Debit cards have overtaken cash to become the top payment method in the UK for the first time, according to a new British Retail Consortium (BRC) report.

The BRC’s Annual Payments Survey revealed that cards accounted for more than half of all customer transactions in 2016, driven by the rise in contactless payments and customers increasingly choosing cards for lower value payments.

The share of debit card transactions grew 4.5% to almost 43% of all retail transactions, overtaking cash transactions which saw a 5% fall to 42%.

Other key findings from the survey include:

  • Contactless cards now account for a third of all card purchases
  • Retailers spent over £1bn last year to accept payments from customers
  • Retail spending on credit cards has fallen, down from £73bn in 2015 to £72bn in 2016

Andrew Cregan, BRC policy advisor for payments and consumer credit, said: “A growing number of retailers have invested in payment technology to accept cards, contactless payments and new payment applications both online and in store.

“In part, this has been facilitated by the Interchange Fee Regulation which was introduced across the EU and has led to a significant fall in the cost of collection that benefits retailers and their customers.”

Meanwhile, latest data from Barclaycard’s Contactless Spending Index, unveiled earlier this week, has revealed that 2017 is set to be another record-breaking year for ‘touch and go’ payments in the UK, with more than half (51%) of all transactions up to the eligible limit of £30 now being made using contactless – and touch and go spending jumping 166% overall in 2016.

Tami Hargreaves, commercial director for digital consumer payments at Barclaycard, said: “As we approach the tenth anniversary of touch and go payments, it’s interesting to see just how much UK shoppers are valuing the convenience the speed and ease of contactless payments. Uptake and usage of the technology has evolved at a rapid pace, which is supported by our data which shows a significant surge in recent years.

“With Barclaycard data revealing that more than half of eligible in-store card payments are now made using contactless technology and more innovation in the pipeline to enhance the use of mobile and wearable devices, we expect to see contactless spending go from strength to strength for the foreseeable future.”

Commentators said the figures highlighted the importance for retailers of all sizes to meet their customers’ payment needs.