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April 13, 2015

Cheque and cash use falls as electronic payments grow

Dominance of the debit card has yet to eliminate old-fashioned spending.

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Cash and cheques are continuing to decline in popularity in the UK as electronic payment becomes ever more dominant, according to figures from the bank Halifax.

Customers were found to be making 85% of current account transactions electronically, with online banking, mobile banking, and contactless and mobile payment systems such as Paym driving the trend.

Nick Young, head of current accounts at Halifax, said: "This trend away from cash is likely to go on as banks innovate and provide customers with more convenient ways to pay for their goods and we continue to see the rise of new, non-traditional entrants into the payments market.

"Consumers now have much more choice regarding payment methods and have adjusted their spending habits accordingly."

Debit cards have continued to become more dominant in current account transactions, growing to 56.7% from 54.9% in 2013, with card payment now accounts for £30 of every £100 spent.

Faster payments, which includes contactless and mobile, has grown only narrowly from 2.3% to 2.7% of current account transactions, whilst cash use has slightly fallen to 16.6% and cheque use to 1.2%.

Despite the limited use cheques still account for more than £8 of every £100 spent, just over half that of faster payments, which account for £15 of every £100 spent.

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Whilst the data confirms the direction of travel for modern payments it also reaffirms the longevity of old-fashioned payments.

This is in contrast to the views of tech-minded financiers such as the PPRO Group’s chief executive Simon Black, who told CBR last week: "I think in the future we’ll use cash as much as we use cheques today."

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