Despite also seeing a 30% rise in the number of contactless payments to 17 billion, 2022 was also the first year in a decade that the number of cash payments increased. While the number of cash payments rose from 6 billion in 2021 to 6.4 billion in 2022, the proportion of payments made using cash fell from 15% to 14%. Ten years ago, 54% of all payments in the UK were made with cash.

On the findings, Adrian Buckle, head of research at UK Finance, said: “During 2022 we saw increased use of contactless, online banking and mobile payments, although cost-of-living challenges meant that some people preferred to use cash to help with their budgeting.

“Changes to shopping and travel habits, particularly related to the rise of hybrid working, led to a big jump in the volume of transactions made. Debit cards remain the most popular way of paying, with them now accounting for half of all payments made in the UK.”

Interestingly, while payments made by businesses accounted for 13% of all payments in the UK during 2022, given their high average value, business payments comprised 82% of the total value of payments throughout the year. Consumers made 87% of all payments, accounting for 18% of total payment value.

The use of remote banking by businesses contributed to a growth of remote payments made through the Faster Payments Service, which saw a 17% increase to 4.3 billion payments.

The research also found that buy-now-pay-later (BNPL) usage during 2022 remained consistent with the 12% of UK people who reported using the service in 2021. There was a notable increase in people aged over 65 who reported using BNPL, doubling 2021 figures from 4% to 8%.

Looking ahead, UK Finance forecasts a further decline in the use of cash, while seeing a steady increase in debit card payments as they grow in popularity. The forecast reads that debit card payment volumes will increase to over 27 billion, which will likely be driven through contactless payments, online shopping, and the ever-increasing levels of card acceptance among businesses of all sizes.

Source: UK Finance Buckle added: “There is a wide variety of payment methods available in the UK and each provides specific benefits to the people using them. Over the next decade we are forecasting further growth in the use of card and mobile payments and market developments such as Open Banking may bring further changes to the payments landscape.”