The recent revelation from Apple’s CEO Tim Cook that “your kids will not know what money is†might not be so far-fetched.
At the end of last year, the amount of actual cash* in the UK stood at £73.6 billion, whereas electronic money** is now at £2,034 billion. This puts the percentage of electronic money at 96.5% and physical cash at just 3.5%.[1]
Cashless payment methods are also becoming increasingly popular. Contactless spending increased almost fourfold last year[2], and since the start of the millennium, debit card ownership by UK adults has increased from 77%[3] to 91%[4].
Is it a question of whether the UK will become completely cashless? Or a question of when?
To mark this giant leap in cashless payments, MBNA have created a 3-part series of infographics that shows how far we’ve come towards becoming a cashless society and what lies in store.
The next big push towards a cashless society
In the series, MBNA’s head of innovation, Gary Watts, casts his view on what will be the driving force in the UK becoming a cashless society.
Watts believes the arrival of Google’s Android Pay and Samsung Pay will increase cashless payments and reduce the number of cash payments as a consequence.
“Massive handset coverage in the UK will be the catalyst that accelerates digital wallet uptake and the decline in cash payments.
“When it hits the UK, it’ll impact the majority, 98% in fact, of our customer base.â€
MBNA have already seen the impact of Apple Pay on their customers. Watts believes the capability of these digital wallets could cause take-up to increase across different generations.
“Mobile wallets aren’t just for the young. Since their arrival, we’ve seen a large number of MBNA customers in the over 40s age bracket move towards Apple Pay.â€
Since a framework for enabling contactless capability on transport around the UK was unveiled last month[5], contactless looks set to expand in a big way. Watts is confident contactless rail journeys will be with us in the next 8 years.
“Contactless technology on all rail journeys is not going to happen overnight, but it will almost definitely happen before all buses are enabled with contactless technology, which is set out for 2022. Trains will win the race to contactless.â€
Watts notes, however, that there will always be a certain level of trepidation when it comes to adopting cashless payments that could lead to the survival of physical cash.
“The majority of the population will use digital wallets as the predominant payment method, but cash will certainly still be an option.
“There will always be a section of the population who will look to the technology with apprehension.â€
MBNA charts the history of money
- Part 1 charts 8000 years of currency from bartering to the debit boom
- Part 2 revisits the rapid development of post-millennium money, which saw some of the biggest changes to the way we pay.
- Part 3 uses expert opinion from MBNA’s head of innovation, Gary Watts, to provide insights into some of the biggest developments that are planned and predicted for the future of money and payment methods.
Tracking the decline of cash
Physical cash has managed to hold on as the predominant payment method for a surprisingly long time. It wasn’t until 2014 that cash payments fell from 52% to 48%.[6] This was the first time we spent less in cash than we did using non-cash means***.
Contactless has also seen an incredible surge. Since its arrival in 2007, contactless card adoption has grown to 76 million[7] (2015 figures).
According to the UK card association, at the end of last year contactless payments made up 10%[8] of card transactions with some estimates putting the figure as high as 1 in 7 card payments.[9]
Spending on contactless cards also reached a record £1 billion in a single month for the first time last November.[10]
[1] Figures according to M4 and M0 publications from the Bank of England. All statistics and calculations confirmed by the Treasury on 14 December 2015.
[2] http://www.theukcardsassociation.org.uk/news/CardExpenditureStatisticsNovember2015.asp
[3] http://www.theukcardsassociation.org.uk/wm_documents/decade_of_cards_final.pdf
[4] http://www.theukcardsassociation.org.uk/news/UKPlasticCards2013.asp
[5] http://www.theukcardsassociation.org.uk/news/ContactlessTransport.asp
[6] http://www.bbc.co.uk/news/business-32778196
[7] http://uk.creditcards.com/credit-card-news/uk-britain-credit-debit-card-statistics-international.php
[8] https://money-watch.co.uk/10589/10-card-payments-contactless
[9] http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/12120370/Contactless-cards-now-used-for-one-in-seven-sales.html
[10] http://www.theukcardsassociation.org.uk/news/CardExpenditureStatisticsNovember2015.asp