Yahoo Finance Contactless card use soars as pandemic sees cash decline
Contactless payments soared by 83% for credit cards and 56.2% for debit cards during the year, new data has shown.
According to the latest data published by UK Finance on Wednesday, the UK saw 2 billion debit card transactions in November, a 29.5% increase from the same month last year, and a 22.6% rise compared to 2019.
The total spend of £62.4bn was 8.2% higher than November 2020 and 20.5% higher than in the same period in 2019.
This comes after the contactless payment limit was upped to £100 ($136) from 15 October.
There were also 353 million credit card transactions during the month, 29.1% and 14.7% more than 2020 and 2019 respectively. The total spend of £18.6bn on credit cards was 28.5% higher than the previous year, and 8.2% higher than in November 2019.
UK Finance also revealed that outstanding balances on credit cards contracted by 0.2% in the twelve months to November as repayments outstripped new borrowing.
Read more: UK consumer prices hit new 30-year high as inflation rises to 5.5%
“We’ve been falling out of love with cash as a means of payment for a while, but the pandemic is certainly speeding the trend,” Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said.
“Our online shopping habit and the reluctance of many shops to accept cash payments means the number of purchases we pay for in plastic continues to grow.
“We may have been flashing the plastic more, but this certainly isn’t translating into higher credit card balances. However, it is worth saying these figures are from November and as the cost of living continues to soar, figures in the coming months may not look so rosy.”
Read more: UK facing worst cost of living crisis in 60 years
The news comes as UK inflation came in at 5.5% in the 12 months to January, up from 5.4% in December 2021, reaching a new 30-year high.
This was ahead of the 5.4% figure that economists expected, marking an acceleration for four consecutive months, and adding to the current cost of living squeeze.
The latest figures were the highest reading since March 1992, when inflation stood at 7.1%.
Incomes in Britain have also seen their biggest squeeze since 2014 in the three months to December as UK wage growth slowed.
After adjusting for recent rises in consumer prices, real total pay fell in the year to October-December 2021, despite a strong recovery in bonuses. Average wages excluding bonuses fell 1.2% - the biggest decline in almost eight years.
Watch: How does inflation affect interest rates?
