Debit cards forecast to overtake cash as payment used most often by 2018
Debit cards are set to overtake cash to be the UK's most frequently used payment method by 2018 - three years earlier than previously expected - according to a payments industry trade association.
Rapid growth in the use of contactless cards means that, by the end of next year, cash will no longer be king as the payment method turned to most often, forecasts by Payments UK show.
In May 2016, the payments body had predicted the tipping point in the nation's payment habits would happen in 2021 - but now it expects this to happen three years earlier.
Its figures show that debit cards were used 11.6 billion times in 2016 - with just over one in five of these transactions made using contactless.
Cash was used for 15.4 billion payments last year. Two-fifths (40%) of payments in 2016 were made using cash.
By 2018, 13.4 billion debit card payments are predicted - of which around one in three are expected to be contactless.
Cash is expected to be used for 13.3 billion payments in 2018 - meaning that for the first time, it will not be the most frequently used payment method.
Adrian Buckle, chief economist at Payments UK, said: " The popularity of contactless means that we expect debit cards to overtake cash as the UK's most frequently used payment method in late 2018, three years earlier than we previously thought.
"This is a significant shift but it's vital to note that even in the face of this change, we believe any claims the UK will soon become a cashless society are wide of the mark."
Despite the move towards plastic, cash is still predicted to make up around a fifth (21%) of payments in 10 years' time, when it will have held on to its position as the UK's second most frequently used payment method, according to Payments UK's expectations.
Payments UK prepares reports each year using industry data to take a detailed look at payment trends in the UK.
In September 2015, the limit for a single payment that could be made using contactless was increased by £10 to £30, making it an increasingly handy alternative to cash.
The technology enables customers to pay for goods with a single tap of their card on a reader, without the need to provide a signature or enter their Pin.
By the end of 2016, 70% of debit cards and 51% of credit cards in the UK had contactless functionality.
In 2016, the most popular location to make contactless payments was at the supermarket, which accounted for over a third of all contactless payments made in the UK, according to Payments UK.
The range of places where contactless payments are accepted includes Aldi, Barnardo's, Greggs, McDonald's, the M6 Toll, London Buses, London Tubes and the Post Office.
James Frost, UK chief marketing officer of payments processor Worldpay, said: "Contactless cards have paved the way for rapid adoption of mobile payment systems... Today one in five of us will use the technology at least once a day, rising to a third of people in London."