Contactless payments accounted for 27% of total UK payments last year as the Covid-19 pandemic changed consumer habits.
In a year when the total number of payments made fell by 11% to 35.5 billion, contactless payments increased by 12%, reaching 9.6 billion.
The figures from UK Finance’s 2021 payment markets report tell the story of how the Covid-19 pandemic and the subsequent lockdowns it brought affected payment habits.
It was consumer spending, making up 86% of total payments, which caused the first reduction in the number of payments made in the UK for six years. While the number of consumer payments reduced by 13% to 30.7 billion, business and government payments – which make up 80% of the total value of payments – increased by 14% to 4.8 billion.
Alongside the increased use of contactless payment technology, mobile payments and internet banking were also increasingly used, while cash declined as a method of payment.
The research found that a massive 83% of people in the UK now use contactless, with no age group or region falling below 75% usage.
In April 2020, the spending limit for contactless payments increased to £45 from £30, and a year later the amount increased to £100. Supermarkets accounted for 41% of contactless payments in 2020.
UK Finance said there are 135 million contactless cards in in the UK, with 88% of debit cards and 81% of credit cards using the technology.
David Postings, CEO at UK Finance, said it is still too early to say whether changes to payment habits, which were caused by Covid-19 restrictions, are here to stay.
“We did see an acceleration in some existing trends, such as the reduction in cash usage and the growth in contactless and mobile payments,” he said.
“The increase in the contactless limit to £45, coupled with retailers encouraging its use, meant that more than a quarter of all payments in 2020 were made via contactless. The use of cash fell, reflecting the fact that large parts of the economy were closed during the year, although it still remained the second most popular payment method behind debit cards.”
Mobile phone and smart watch payments saw increased use, with 32% of the adult population registered to use mobile payments by the end of 2020, compared to just under 25% a year earlier.
During 2020, the number of cash payments made in the UK fell by 35%, accounting for 17% all payments in the UK, the second most frequently used payment method behind debit cards, which includes contactless payments. There were 1.2 million consumers who mainly used cash for their day-to-day spending during 2020.
“To say the pandemic accelerated digital payments is an understatement,” said Siamac Rezaiezadeh, director of product marketing at payments fintech GoCardless.
“With Brits shopping online more frequently than ever, retailers encouraging contactless payments at the point of sale, and businesses looking for ways to optimise their accounts receivable and accounts payable processes, it was only a matter of time before consumers and businesses alike became more comfortable using these methods, ushering an irreversible change in payment behaviour.”