UK cash use falls below 10% as digital payments rise

UK Finance has reported a sharp rise in digital payment use in the UK and a further decline in cash.

The latest data, along with recent industry developments, is prompting fresh calls from payment specialists to speed up modernisation of the country's core payment infrastructure.

UK Finance's Payment Markets figures show that more than half of UK adults now use mobile wallets. Debit, credit and charge cards account for 64% of payments. Faster Payments is now the country's second most-used payment method, with 5.6 billion transactions. Cash has fallen below 10% of payments for the first time.

These shifts are increasing pressure on banks and merchants that still rely on legacy systems or cash-heavy business models. Industry executives say the gap between consumer behaviour and the underlying infrastructure is widening.

RedCompass Labs argues that the current payment rails are not keeping pace with changing consumer habits.

"UK Finance's figures show that consumer payment behaviour is changing much faster than the infrastructure beneath it.

"We have moved the card from our wallet to our phone, but largely kept the same rails underneath. Meanwhile, countries such as Brazil and India have gone further in making account-to-account payments part of everyday commerce.

"As cash use declines, every banking outage has become even more damaging. Last year, the Treasury Committee counted more than 800 hours of downtime across nine major banks, equating to over a month of collective outage. Banks are being asked to modernise and remain always-on at the same time, but ageing infrastructure makes that harder.

"The UK needs to move beyond another way to tap and modernise the rails themselves, so banks can support cards, instant payments and new forms of money like stablecoins. The future of payments in the UK will be multi-rail, but the infrastructure isn't there yet, and the investment case is now urgent," said Pratiksha Pathak, Senior Vice President, Head of Payments, RedCompass Labs.

Concerns about resilience have intensified after a series of banking outages. Analysts say the decline in cash use leaves consumers more exposed when digital channels fail.

At the same time, developments in blockchain and tokenised money are drawing attention to how new forms of value could integrate with existing rails. HSBC and Standard Chartered recently completed the first live transaction on Swift's blockchain-based ledger, using tokenised deposits within the banking system.

ACI Worldwide sees the transaction as a sign that digital assets are entering everyday financial infrastructure.

"This is an important milestone because it demonstrates that tokenised deposits are moving from concept to practical application within the existing financial system," said Craig Ramsey, Global Head of Account-to-Account Payments, ACI Worldwide.

"The real significance is not the underlying technology itself, but the ability to make liquidity more accessible, mobile, and efficient across institutions.

"As commerce becomes increasingly real-time and always-on, banks need infrastructure that can orchestrate multiple forms of money, from traditional bank deposits and instant payments to stablecoins and tokenized deposits. Digital assets should not be treated as a separate challenge. Like any new payment rail, they need to operate alongside existing payment types within a common operating model. The future is not about a single winning rail, but about intelligently connecting them to move value more efficiently," Ramsey said.

Merchants that have long depended on coins are also feeling the impact of the shift to cards and mobile payments. Sectors such as vending, arcades and laundrettes are now questioning whether cash still makes commercial sense.

Nayax, which provides payment readers for unattended retail, says the latest UK Finance figures show how far cash use has fallen.

"UK Finance released its latest Payment Markets report this week, showing how the way people pay is continuing to change. The main findings are pretty telling in that cash now accounts for eight per cent of payments, down from 45 per cent a decade ago, while the proportion of UK adults registered for a mobile payment service has risen from 57 per cent to 65 per cent in just one year. Among 25 to 34-year-olds, it's already at 89 per cent.

"Card payments are now standard across much of the UK economy. But for services that have traditionally depended on coins - including arcades, laundrettes and vending machines - the transition is not yet complete, even as customers become far less likely to carry cash. Some 19 million people now use cash once a month or less. For them, carrying coins just isn't part of their normal routine anymore. They expect to tap the card, phone or watch they already have with them, whether they're buying a coffee, playing an arcade game or using a self-service machine.

"And these are often spontaneous purchases, so if someone can't use their usual payment method to buy a £2 or £3 drink or play a game, they're unlikely to go searching for a cash machine or return later with coins. They'll simply walk away. One missed purchase might appear insignificant, but repeated across hundreds of customers and payment points, those lost sales quickly add up.

"Given this massive shift over the past few years, the question for operators is no longer really whether to accept digital payments, but whether cash still needs to sit alongside them. The answer will vary by location and customer base. Cash remains important where people genuinely rely on it, but it should be a commercial decision based on how customers actually pay - not something an operator continues to support simply because the machine has always taken coins," said Lynda Clarke, General Manager UK, Nayax.