Denmark has moved one step closer to becoming the world's first cashless society, as the government proposes scrapping the obligation for retailers to accept cash as payment. How quickly will other countries such as the UK begin to follow suit?
Data from Worldpay, the UK’s leading payments processor, reflects a significant shift in the way British consumers are paying for goods, with High Street credit and debit card transactions rising just over 6% in 2014, following similar gains the previous year.
Londoners are responsible for the single biggest year on year rise in card spending. Transaction volumes on credit and debit cards in the Capital have risen by 9.3% in the past year. Cosmopolitan Leeds is not far behind however, with card-based payments rising by 8.9% in 2014, while Reading (8.0%), Southampton (7.9%), and Liverpool (7.7%) are also creeping towards the cashless tipping point.
Worldpay believes a migration of low value cash payments to card, alongside increasing use of contactless are pushing the UK closer to the point where cards overtake cash as the dominant payment method on the High Street. Recent data from the British Retail Consortium suggests cash use is down by 14% over the past five years across the UK.
Worldpay’s claims are backed by its data which shows a steady decline in average transaction values for credit and debit cards, from £31.51 in 2012, to £29.67 in 2014, an overall drop of 6%.* In the fast-growing contactless sector meanwhile, where the number of transactions processed has risen by 150% in the last six months, transaction values have levelled out at around £7.24, as people become more accustomed to swapping cash for plastic for their daily coffee, lunch or a few last-minute groceries. **
Average sale sizes in card-loving Liverpool are around the lowest in the UK at £26.51, in contrast to Leicester which has the UK’s highest average transaction value of £32.19. The Midlands city also had the lowest year on year rise in transaction volumes, just 1.95%, suggesting consumers prefer cash over cards in the heart of the UK.
Cash may not be quite done with yet, but it is clearly losing its appeal, particularly among tech-savvy Gen Y’ers. Worldpay research of 2000 consumers found the majority of Brits over 45 years old still like to have cash on them, nearly 60 per cent of 25-to-34-year-olds would prefer to never carry cash.
Dave Hobday, Managing Director, Worldpay UK, said: “Shoppers don’t want to worry about having enough cash in their wallets. Whether they’re spending a leisurely day out hitting every shop on the high street or popping into a cafe for a quick latte, they just want payments to be fast, simple and convenient. This is where card payments have the edge over cash, time and time again. It might not quite be curtains for cash just yet, but notes and coins are starting look like they belong to a different time.”