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One in four payments now contactless in UK as COVID speeds death of cash

Contactless card payment at a take away in Dublin during Level Five COVID-19 lockdown.
On Wednesday, March 23, 2021, in Dublin, Ireland. (Photo by Artur Widak/NurPhoto via Getty Images)
The upper limit on the value of an individual contactless payment was increased from £30 to £45 in April 2020. Photo: Getty Images

Last year the number of contactless payments made in the UK increased by 12% to 9.6 billion, new data revealed. This is in part because Brits avoided touching cash in a bid to curb the spread of the coronavirus.

UK Finance’s 2021 Payment Markets Report said contactless payments accounted for more than a quarter (27%) of all payments and found there are now 135 million contactless cards in circulation – 88% of debit cards and 81% of credit cards now offer this service.

In the last four years contactless payments have jumped from being just 7% of all payments to 27%, and 83% of people in the UK now use this option, where consumers need only touch their card to a payment terminal to complete a transaction, without the need to enter their PIN.

Watch: Contactless payment limit to increase to £100, Chancellor Rishi Sunak says

The upper limit on the value of an individual contactless payment was increased from £30 to £45 in April 2020. This measure was implemented ahead of schedule by the industry in order to help consumers and businesses during lockdown and also amid fears about the transmission of COVID-19 on bank notes.

At the same time, 2020 saw the number of cash payments fall by 35%, meaning that cash was only used for 17% of all payments in the UK.

During last year there were 13.7 million consumers who used cash only once a month or not at all, a significant increase from 7.4 million consumers the previous year.

Read more: COVID leads to 400 million extra UK contactless payments for Visa

“Whilst some of this can be attributed to changing payment preferences, it also reflects the fact that during lockdown, people had fewer opportunities to go shopping and were being encouraged by many shops to pay by card or contactless instead of cash,” the report said.

David Postings, UK Finance CEO, said: “The pandemic resulted in some marked changes in payments behaviour and while it’s too early to say whether they are permanent changes, we did see an acceleration in some existing trends such as the reduction in cash usage and the growth in contactless and mobile payments."

Supermarkets were the most popular place to use contactless payments in 2020. This was partly because supermarkets remained open during the lockdown periods in 2020, while many other types of retail and hospitality needed to close.

The report also said that for the first time in six years, the total number of payments in the UK declined, falling by 11% to 35.6 billion.

The number of consumer payments fell by 13% to 30.7 billion while the number of payments made by commercial organisations, government and not-for-profit organisations increased slightly to 4.8 billion.

The was also strong growth in the use of mobile phones and smart watches to make payments.

Nearly a third (32%, 17.3 million people) of the population were registered to use mobile payments by the end of 2020, an increase of 7.4 million people compared to 2019.

Watch: How COVID-19 is fuelling contactless payment companies