Mobile payments have overtaken cash as the most popular way to pay

With the recent launch of Apple’s Tap to Pay function, research from digital payment provider, takepayments, suggests that the UK has become a contactless-first economy. 

A survey of over 1,000 UK consumers has revealed that Apple Pay and contactless payments have overtaken cash payments as our favourite ways to pay in-store, and the UK is more ready to embrace Apple Tap to Pay and other contactless payment options than other countries.

UK leading the charge with contactless payments

In addition to the report from takepayments, a report by Lloyds Bank from September 2022 also confirmed that 87% of UK face-to-face payments were contactless: which is quite a jump compared to other leading economies. 

Estimates from Payments Journal suggest that only 45% of Americans use contactless payments in comparison; just half of the uptake of UK shoppers. 

While this shift was most likely exacerbated by the pandemic, the early adoption of contactless payments in the UK market is another factor. The system was widely embraced in 2007, eight years ahead of the US, which only launched “tap to pay” in 2015. 

The increase of the UK contactless limit to £100 in October 2021 may have also played a significant role in its popularity over the past few years.

Jodie Wilkinson, Head of Strategic Partnerships at takepayments, says:

“Our data also shows that contactless payments grew by 596% in colleges and universities from 2022 to 2023. 

The FIS also estimates that the continued growth of digital wallet payments will account for 21% of the UK market share by 2026.”

She continues: “This shows fairly clearly that the majority of customers want to pay with contactless methods, whether that’s physical or digital cards, wherever they shop. Failing to accommodate these needs could put small businesses at a disadvantage, as cash-free shoppers may take their money elsewhere.”

See: The best POS systems for small businesses in 2023

Further findings

It is reported that younger consumers are driving the adoption of mobile payments like Apple Pay, Google Pay, and PayPal. 

30% of Gen Z said that mobile payments were their favourite way to pay, compared with just 5% of over-55s.

1 in 5 respondents (20%) said mobile payments were their preferred choice, ahead of cash and Chip & PIN. 

When asked why, 42% gave convenience as their main reason, followed by:

• “Mobile payments are the most widely accepted option” – 23%
• “I never carry cash” – 19%
• “It’s the most secure option” – 11%
• “I don’t know my PIN” – 3% 

Nearly 1 in 3 people admit to never carrying cash, and more than half admitted to being deterred from shopping at a cash-only business.

See: Nearly half of UK consumers want to pay for subscriptions with direct debit

Sticking with cash: the right option?

The top reason people prefer cash is they feel it’s the most secure option. More than half (53%) of cash users cited security as a reason they stick to coins and notes.

Budgeting came in as a close second: 52% of those who prefer cash said that carrying it helps them stick to a hard spending limit in stores, deterring them from overspending.

However, Wilkinson highlights why cash isn’t quite as useful for budgeting and security as many people might believe. She states that sticking with cash may sound good in theory, but:

• It requires physical money: regularly withdrawing your income in cash may involve several trips to the bank. You’ll have to set time aside each week or month to get the money and budget your contributions.
• Money can be lost or stolen: some people may find themselves carrying large sums of money around that could be lost or stolen. You’re unable to contact your bank and freeze payments like you are should you lose your debit or credit card.
• You may miss out on interest or cashback options: by dealing primarily in cash, you may miss out on cashback on card transactions and interest on savings.

Conclusion

According to this new data, contactless is the most popular payment method in the UK. Mobile payments like Apple Pay came in 2nd, and cash is now in 3rd.