Mobile payments are on the rise in the UK, with two-thirds of adults registered with at least one mobile payment service last year, according to a report by UK Finance. The use of phones for payments has increased significantly since the launch of Apple Pay in the UK a decade ago.
While cash usage continues to decline, the pace of this fall is slowing, suggesting that notes and coins will remain an important payment option for many people for at least another decade. Consumers are increasingly storing card details on their phones or watches and making contactless payments authenticated by facial or fingerprint recognition, rather than entering a PIN.
Nine in 10 users of mobile wallets have their debit card as their default payment method on their phone, with the remainder having registered their credit card.
The data shows that mobile payment usage increases year on year across all age groups. Among 16 to 24-year-olds, usage is projected to rise from 72% in 2023 to 84% in 2025. Similar patterns are seen in other age groups, though usage is generally lower among older demographics. Overall, mobile payments usage is highest among younger adults and declines steadily with age, but consistently increases over the three-year period across every age group.
More than 80% of 16 to 34-year-olds make mobile payments regularly, compared with 22% of those aged 65 and over.
"Our latest data show that the UK is now a predominantly digital economy when it comes to making and receiving payments," said Adrian Buckle, head of research at UK Finance.
Cash not dead yet
The UK Payments Market report indicates that debit cards, including those loaded onto phones, were the predominant way to pay last year, accounting for 54% of all payments. Contactless payments made up 39% of transactions.
Cheques, which were once expected to be phased out, now account for only 0.2% of payments made in the UK, with a total of 77 million written last year.
Cash is unlikely to disappear entirely, according to forecasts by UK Finance. Notes and coins were used in 3.9 billion, or 8%, of all payments last year. This is expected to halve to 4% of all payments in the UK in 2035, representing two billion transactions.
However, some individuals still have a strong preference for using cash. The report states, "Rather than the UK becoming a cash-free society over the next decade, the UK will transition to an economy where cash is less important than it once was but remains widely valued and still preferred by some."
Nearly 50 million people used a cash machine last year. Nick Quin, from Link, which oversees the UK's ATM network, noted that while cash withdrawals are falling, millions still rely on cash daily. "People on lower incomes rely more heavily or entirely on cash to budget, which is why our job is to protect access to cash for as long as people need it."
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