How will you be paying for stuff in a decade’s time? Vicky Shaw looks at the predictions from a trade body
Ten years ago, would you have reached for your mobile phone in order to pay a friend back for last night’s meal out? Or swiped your card to pay for something that cost a few pounds, rather than using change from your wallet?
The way we pay has changed a lot over the last decade - and looking at some new forecasts there are likely to be further big shake-ups in the coming years.
Payments UK, the trade association for the payments industry, has compared the way we paid for items in 2014 with the methods we’re likely to be using in 2024.
While the number of cash payments is set to decline, increasingly consumers will be using their debit cards to make contactless payments, where they might previously have used cash, according to forecasts.
The increase in mobile payments as a handy way to pay, with many people now finding it easy to transfer money with the touch of a few buttons on their phone, is another reason why cash will get less use.
Payments UK predicts that 2016 will be a tipping point for consumers and cash.
It expects that next year, for the first time, the total number of non-cash payments made by consumers will be bigger than the number of cash payments made.
Adrian Buckle, chief economist at Payments UK, says: “The digital economy and mobile payments are going to be where much of the innovation happens over the next few years, which is going to lead to new ways of making and receiving payments in these areas.
“Obviously, it’s much harder to predict the detail or what services are going to turn out to be the big game changers - but they could well include things like wearable tech, where current card technology is incorporated into anything from wristbands to mobile phones.
“One thing we are sure about is that there will be a greater number of small value purchases made with cards. Whilst some of this will arise as a result of population growth, consumers’ increasing appetite to use contactless payments up and down the country is expected to have a considerable impact on card usage, particularly as more and more businesses and retailers start to accept contactless payments.
“This shift will undoubtedly impact the number of cash payments that we all make.”
While new technology is set to shake up payments further, cash is still expected to play a big role in our lives.
Payments UK predicts the average adult will still make 225 cash payments in 2024.
This is still a significant chunk of the 679 average total number of payments that an adult is expected to make in 2024 - albeit lower than the 345 cash payments typically made in 2014.
Some 2.5 billion withdrawals are expected from UK cash machines in 2024, the value withdrawn predicted to increase from £189 billion in 2014 to £196 billion in 2019, before falling slightly to £192 billion in 2024.
Buckle says: “Interestingly, while the pace of change and the number of ways to pay has never been greater, cash is still a very significant payment method and notes and coins are expected to have an important place in our wallets and purses for the foreseeable future.”
The trusty cheque is also expected to be a form of payment we still rely on in 2024, with most of us making around two cheque payments a year.
HOW THE NUMBER OF CONSUMER PAYMENTS PER ADULT IS EXPECTED TO CHANGE (2014 figure followed by 2024 prediction):
• Cash: 345, 225
• Cheque: 7, 2
• Debit card: 172, 282
• Credit card: 41, 53
• Automated credit (includes Faster Payments, Bacs, direct credits and standing orders): 20, 37
• Direct Debit: 63, 67
• Other (including store cards, prepaid cards and PayPal): 9, 12
• Total: 656, 679