Coming Soon: The death of paper money

BRITONS did 10 per cent less of their shopping with cash last year as people turn their backs on coins and notes – leading some analysts to predict a cash-free future.

Only eight per cent of consumers believe that traditional coinage will be the payment method of choice by 2020, with contactless cards and new technologies gaining ground.

The findings come from a series of studies that appear to show a sea change in the way that customers think and act when it comes to paying for their goods.

Cash made up just £28.93 in every £100 spent at retailers in 2012, according to a survey published this morning by the British Retail Consortium (BRC) – down sharply from around £32 the previous year.

Plastic is now used for £69.25 worth of each £100 spent, the BRC said – up from £67.12 in 2011.

And the consultancy KPMG said that the proportion of people believing that cash will be a preferred use of payments in 2020 fell from 14 per cent last year to just eight per cent today.

“It is no longer a sweeping statement to suggest that money is about to change forever,” said KPMG’s Mark Hale.

“It might not be tomorrow, but the direction is set and it is only a matter of time and circumstance before cash is materially displaced.”

The BRC’s figures show that cash still makes up over half of all retail transactions, yet is typically used for small amounts. The average cash transaction size was down to £9.78 in 2012, from £10.45 in 2011.

The average debit card transaction is £29.53.

But the preference for cash to pay for small amounts is under threat from methods such as contactless cards and mobile phone payments.

Over half of manned tills will soon be able to accept contactless cards, the BRC said. And half the UK population are either already using mobile payments (20 per cent) or interested in doing so (30 per cent), according to separate data from VocaLink.

“We have now reached the tipping point for mobile payments in the UK, where market readiness, social behaviour and technology combine to create a sudden, ubiquitous change of behaviour,” VocaLink said.

The move away from cash as a necessity means that 48.7 per cent of Londoners, if told they had to leave either their wallet or their phone at home, would opt to take their phone. The finding, released this morning by Paypal, also shows that eight in 10 Brits wish they could leave their wallet at home. And even with their wallets, a quarter find they are short of cash.