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According to new data published today by UK Finance, cash payments made by consumers and businesses fell 11% to £15.4 billion last year.
Despite the fall, cash was still used 25% more often than debit cards (£11.6 billion).
Cash represented almost half (44%) of all payments made by consumers in 2016 – the second year in a row where consumers used cash for fewer than 50% of all payments.
During the same period, cash payments reached £240 billion, accounting for 15% of the total value of consumer spending down 5% on the previous year.
More than one in four (26%) consumer cash payments were for a value of £1 or less, and more than three in five (61%) were for a value of £5 or less.
The average value of a cash payment has increased over the last 10 years from £11.58 in 2006 to £15.80 in 2016 – owing to inflation and changing consumer preferences, as cards are increasingly used to make low-value payments.
The number of cash payments is forecast to fall by 43% to 8.7 billion payments over the next decade, with the total value predicted to fall by 23% to £185 billion in 2026.
Adrian Buckle, chief economist at UK Finance, said: “It is clear that over the past few years we have witnessed a significant shift away from cash use in this country with contactless cards undoubtedly causing a decrease in the use of notes and coins.
“However we don’t believe that the UK is on the verge of becoming cashless, as some reports have claimed. People will always want to choose the payment methods that best suit them and, for the foreseeable future, in lots of cases that will continue to be cash.”
