As consumers are tempted further away from paying for goods with cold hard cash, we investigate what affect the proliferation of plastic is having on …
As consumers are tempted further away from paying for goods with cold hard cash, we investigate what affect the proliferation of plastic is having on spending behaviour.
A recent report by the UK Payments Council has revealed that the percentage of people using cash has fallen behind those using cards for the first time ever.
The study revealed that 48 per cent of payments by consumers, businesses and financial institutions were made with cash in 2014, meaning the remaining 52 per cent is made up of electronic transactions.
It seems as if this is a trend that is set to stay too, as the council predicts that just 34 per cent of payments will be made with cash by 2024.
When questioned, 4.4 per cent of adults admitted that they rarely used cash at all, and just one per cent of consumer payments were made by cheque in 2014, showing just how much things have changed.
Cash is certainly still very much in use however, with 18 billion cash payments made in the UK last year, totalling approximately £250 billion.
Speaking in an interview with the BBC, Bank of England chief cashier Victoria Cleland said: "Since I started the job I am seeing a growing demand. I am seeing a 46 per cent increase of notes in circulation. I think the proportion of cash transactions is coming down, but I'm still seeing a fairly stable value of cash transactions."
What is the future of payments?
Cash will not be disappearing any time soon as a new £1 coin is set to come into circulation in 2017 and the Bank of England is planning to introduce plastic £5 and £10 notes in 2016 and 2017. Not only that, the report noted there were a record number of cash machines installed in 2014, with 69,382 in operation last year.
According to the study, the vast majority of those questioned (91 per cent) said they use cash machines at least once a month.
Other technology is hoping to take us further away from cash payments, and Apple Pay is just one such example. It is set to launch in the UK in August and will allow users to pay for goods with their phones.
Concerns over non-card/cash payments
Despite the convenience of cashless systems, research from uSwitch.com suggests many people are reluctant to take them on.
The study found that over half of those questioned (56 per cent) were concerned about this type of technology, and security fears topped the list of worries.
Some 57 per cent of those questioned said they would not be comfortable using their phone to pay for goods, although this attitude may well change as the technology becomes more ubiquitous.
Others (24 per cent) feared this type of payment method could encourage them to spend more, and one-quarter of respondents said they believed they would be more likely to make impulse purchases as a result of using their phone to pay for items.
In order to keep better control on their spending, more than half of respondents (57 per cent) said they would like to have the ability to check their balance, while 38 per cent suggested a cap on so-called tap and go payments would help them to curb their impulse to spend.
Another idea, suggested by one in ten consumers, was to limit where and when phone payments can be used. Some ten per cent said this should depend on the time of day and a further 12 per cent supported a ban on using them in pubs and clubs.
Worryingly, one-quarter said they were concerned no devices and limitations would help them to stay in control of their spending.
No matter what method of payment is used, it is vital that people stay on top of their finances by regularly checking their balance and therefore live within their means.