Read the shape of things to come in the cards

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Smartphones, online and mobile banking and “tap and go” contactless payments are rapidly changing the way we pay for things.

Last year, the number of payments made by debit cards across the UK overtook the number of cash payments for the first time, according to figures from trade association UK Finance.

The growing popularity of contactless payments, which allow people to make payments of up to £30 with a single swipe, was a big driver behind debit cards overtaking cash. Here’s a look at how the way we pay is changing, and what the future could hold.

How widespread are contactless cards in the UK?

By the end of 2017, there were nearly 119 million contactless cards in circulation, with 78 per cent of debit cards and 62 per cent of credit cards being contactless. Nearly two-thirds (63 per cent) of us now use contactless payments, the research found. Millennials, aged 25 to 34, are the most likely to use contactless, with more than three-quarters (77 per cent) of people in this age group making contactless payments in 2017. And while people aged 65 and over are less likely to use contactless, more than half in this age group made such payments in 2017.

Will debit card use continue to increase?

Over the coming decade, debit card payments are expected to see a further surge. UK Finance expects to see a 49 per cent increase, with 19.7 billion payments in 2027, driven by the growth of contactless payments, online shopping and more businesses being able to accept card payments. There are also expected to be 6.4 billion cash payments in 2027.

How will technology change the way we pay in future?

The choice of how we pay is widening. Barclaycard has recently embedded contactless chips into watches and is currently working with brands to embed its payment chip system, bPay, into everyday products, to allow people to pay quickly and easily.

Alison Sagar, head of consumer, PayPal UK, says: “There is more change to come. Payments are constantly evolving, and we will see more changes in the next five years than we have seen in the past 50. We are only just beginning to scratch the surface when it comes to smartphone technology,” she adds, “and the potential of smartphone apps to transform the future of money.”

So where does cash fit in?

There’s still a place for cash – and for many people, it’s an essential way of getting by day-to-day. UK Finance says that rather than being a “cash-free” society over the next decade, notes and coins will continue to be preferred by many. Cash is still expected to be the second most frequently used payment method in 2027 behind debit cards.

Many people still rely on cash for their day-to-day needs. During 2017, 3.4 million consumers hardly used cash at all. But, at the same time, 2.2 million people predominantly used cash when shopping.

Gareth Shaw, a money expert at consumer group Which?, says: “The way we shop and pay for services is changing but for millions of people in the UK cash still plays an essential role in their everyday lives. It’s vital these people are still able to access the cash they need.”

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