Cash payments now account for less than a fifth of transactions according to research from the Halifax Bank.
Debit cards remain the most popular choice of payment, with these types of card used in roughly half of all transactions.
It could be a sign of the times, but the number of cash payments has fallen by 15% in the last year alone, as customers turn to alternative options.
“More and more people prefer the convenience of paying on plastic and setting up automated payments for regular purchases,” said Anthony Warrington, director of personal current accounts at the Halifax.
‘A payment revolution’
Astonishingly, only £18 in every £100 spent by Halifax customers was is in cash with economists even suggesting that a ‘payment revolution’ is taking place.
Debit cards first overtook cash as the most popular payment method in 2010 while the Payments Council expects the number of cash payments to fall by a third by 2020 – to 14 billion a year.
In terms of volume though, more than half of all payments are still made in cash.
Digital systems are easier to manage for all concerned, which could partly be behind the increase in usage.
New applications to boost spending options
Meanwhile, phone applications are also being launched on a constant basis that provides people with even more methods of payment.
Faster payment options accounted for nearly £13 in every £100 spent while payments by debit cards and direct debit accounted for more than £48 in every £100 spent.
The study suggests that digital payment technologies and the use of contactless payments are likely to increase in the coming years although reliability still plays a large part.
Banks need to gain the trust of customers by proving that their systems are reliable – especially after incidents where customers are locked out of accounts and blocked from using their cards.
Considering prepaid card options
A prepaid card could be a solution for those with concerns over their funds or looking for a way to control spending, as only the sums on the card can be spent.
The cards can however be topped up if necessary and can be replaced if they are lost or stolen without funds being affected.
Unlike credit and debit cards, prepaid cards are also not directly linked to a bank account, making fraudulent activity a lot more difficult.
The cards can be checked online or via text messages, meaning it’s possible to stay in complete control of all sending without the need to constantly withdraw cash.
Furthermore, the concept of running up debt does not apply with prepaid cards as a credit facility does not exist.