While the number of cash transactions fell by 15% to 13.1bn last year, the number of debit card transactions rose to 13.2bn – largely driven by the proliferation of contactless payment technology, which accounted for 5.6bn of payments made last year.
In 2017 contactless cards accounted for 15% of all payments. However UK Finance has predicted that this will rise to 36% in a decade’s time with customers between 25 and 34 the most likely users.
An estimated 3.4m people hardly used cash at all in 2017.
UK Finance chief executive Stephen Jones commented: "The choice of payment options available in the UK is allowing people to choose to pay the way that best suits them."
"But we are far from becoming a cash-free society and despite the UK transforming to an economy where cash is less important than it once was, it will remain a payment method that continues to be valued and preferred by many."
Implications for the hospitality sector
UKHospitality chief executive Kate Nicholls commented: “Card payments for even the smallest of transactions are ubiquitous and customers expect to be able to pay with flexibility no matter where they are.
“This means that pubs need to be able to accept a range of payment methods or risk alienating customers who are used to the convenience of cashless transactions.
“Pubs that do not keep up with this trend risk finding themselves out of step with competitors.
“The Increase in the number of cashless payments is convenient for customers, but can have unintended negative consequences for pubs.
“Gaming machine income for pubs is decreasing, almost certainly linked to the decrease in cash transactions in pubs and the fact that fewer customers carry cash with them.
“For this reason, UKHospitality has been lobbying the Government for contactless payments on category C and D machines to offset this drop in play and secure a vital revenue stream for pubs.”
In response to the Government's consultation on cash and digital payments int he new economy, Brigid Simmonds, chief executive of the British Beer and Pub Association commented: “A shift towards digital payments across the world of commerce is clearly taking place.
"Whilst this can be good for busy pubs where payments at the bar are much faster for customers, Government intervention towards such innovation needs to be well thought through.
"If not, cash-based businesses such as pubs could be unfairly burdened. In due course, it would be good to see an increase in the maximum limit for contactless payments from £30 to £50.”