As digital payments become increasingly popular, a recent survey conducted by TakePayments reveals the changing payment preferences of UK consumers.
Mobile payments overtake cash
While trends like “cash stuffing” have fuelled narratives of a return to cash, the survey highlights that digital payments, particularly contactless and mobile payments, remain dominant.
This shift presents valuable insights for businesses adapting to consumer payment habits in 2024.
Contactless Payments
Contactless card payments are now the go-to option for nearly half (48%) of respondents, according to the survey.
The convenience, speed, and ease of use make it the top choice across all age groups, even for older demographics.
The UK has been a frontrunner in contactless adoption, with data from Lloyds Bank showing that 87% of face-to-face transactions were contactless.
By comparison, contactless usage in the US was only at 45%, illustrating how the UK’s early adoption, beginning in 2007, set the stage for widespread acceptance.
Mobile Payments Outpace Cash
Interestingly, mobile payments, such as Apple Pay and PayPal, are more popular than cash, with 20% of respondents preferring them compared to 17% who prefer cash.
This shift is driven by younger consumers, with 30% of 18- to 24-year-olds selecting mobile payments as their top choice.
As digital wallets become more ingrained in everyday spending, the Financial Insights Service (FIS) predicts that digital wallet payments could account for 21% of the UK market by 2026.
Despite the convenience mobile payments offer, cash remains favoured by some, especially among those aged 55 and above.
Almost a quarter (22%) of respondents over 55 prefer cash, often citing security and budgeting as primary reasons.
More than half (53%) of cash users believe it’s the most secure payment option, while 52% feel that it helps them manage spending better.
However, cash has its downsides, as carrying physical money presents the risk of loss or theft and excludes consumers from card-linked perks like cashback.
Cash’s Decline and Its Impact on Businesses
Despite the nostalgia for cash, its popularity is waning.
The survey found that 31% of respondents never carry cash, and 7% don’t even know their PIN.
Moreover, many consumers now avoid businesses that are cash-only, with less than half (47%) willing to shop at such establishments.
This preference shift could have a significant financial impact on cash-only businesses, potentially costing them millions in missed sales.
Finder’s research suggests that small UK businesses without card payment options could collectively be losing out on 11.8 million customers annually.
Regional and Demographic Insights
The survey revealed fascinating demographic and regional trends.
Contactless payments are most popular in Scotland, where 63% of respondents prefer this option. In contrast, Wales lags behind, with only 33% opting for contactless.
London, surprisingly, ranks low in contactless preference among English regions, possibly due to the city’s emphasis on consumer rights, including the importance of cash access.
For instance, a 2021 study by Post Office and YouGov found that 71% of Londoners value cash as a consumer right, and 55% were concerned about bank closures impacting cash access.
Key Takeaways for Businesses
For businesses, adapting to these payment trends is crucial.
As more consumers gravitate toward digital payments, offering contactless and mobile payment options is essential for enhancing customer experience and staying competitive.
Cash-only businesses risk alienating a substantial portion of their potential customers, with many shoppers seeing the absence of card payments as an inconvenience.
In summary, while cash remains a trusted option for budgeting and security among some groups, the majority of UK consumers now prefer the convenience of contactless and mobile payments.
For businesses, keeping up with these preferences is vital to avoid losing customers and to create a seamless, modern shopping experience.
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