The end of cash? UK shoppers spend more on contactless cards than ever

Sweden is en route to becoming the first cashless society.

The British Retail Consortium has found that for the first time last year, cards were used for over 50 percent of retail purchases in the UK.

The new figures show that contactless cards now account for one-third of all UK payments, which is up 10 percent from October 2015. Debit and credit were used for 10.3 billion transactions in 2016, which was an increase of 5 percent on 2015.

Niro Sivanathan from the London Business School said: that paying with cash is “psychologically painful”, whilst paying for items with a contactless card “anaesthetises the psychological pain that accompanies payment, seducing us into splashing out”.

The British Retail Consortium said debit, credit and charge cards had “firmly established their place as the dominant payment method in retail”, and were “increasingly displacing cash for lower-value payments”.

“One of the biggest drivers has been the increasing use of contactless payments,” they added. Over than two-thirds of shops now accept contactless cards. This is up from less than half a year ago.

Andrew Cregan from the British Retail Consortium said: “A growing number of retailers have invested in payment technology to accept cards, contactless payments and new payment applications both online and in store,”

The British Retail Consortium found that the average transaction that is paid for on cards fell from £30.53 to £25.40 in 2013. This decline shows they are “increasingly used for lower value transactions, partly driven by the wider acceptance and use of contactless payments,” it said.

The contactless card was first introduced in the UK by Barclays (LON:BARC) almost a decade ago. The limit has been increased from £20 to £30. 

“As we approach the tenth anniversary of ‘touch and go’ payments, it’s interesting to see just how much UK shoppers are valuing the convenience, the speed and ease of contactless payments,” said Tami Hargreaves, from the bank’s card division.

“Uptake and usage of the technology has evolved at a rapid pace, which is supported by our data which shows a significant surge in recent years.”