Contactless makes up a third of all payments

This represented a return to pre-pandemic payment volumes after a significant fall in 2020, with payment trends reverted towards long-run patterns as the economy reopened - with card payments increasing and cash payments falling. 

Debit and card payments rose to £22.9bn in 2021, taking up 57% of all payments in the UK. Additionally, contactless payments grew in popularity with almost a third of all payments being made through contactless methods, up 36% compared with 2020. 

One driver of this has been due to the increase in the contactless limit - going from £45 to £100 - which expanded the range of purchases that could be made this way. Retailers also encouraged the use of contactless during the pandemic as a way of helping to facilitate social distancing in shops. 

Cash payments, however, decreased by 1.7% to six billion, although it remained the second most commonly used payment method, accounting for 15% of all payments made in the UK last year. 

Overall, there were 23.1 million consumers who used cash only once a month or not at all during 2021, a significant increase from 13.7 million consumers the previous year. At the same time, there were 1.1 million consumers who mainly used cash when doing their day-to-day shopping. 

Businesses, meanwhile, made just over 5.5 billion payments in 2021, a 14% increase when compared to 2020. This reflects the reopening of the economy as the pandemic-related lockdowns came to an end. 

UK Finance’s head of research Adrian Buckle said: “Payment trends generally tend to change slowly, as we all form habits about the way we pay for things and these don’t change easily. 

“However, the pandemic accelerated the pace of change in 2020, in particular the reduction in the number of cash payments. In 2021 we saw the total number of payments return to pre-pandemic levels and a return towards the long-run trends in payment method usage. 

“Contactless continued to be popular, accounting for almost a third of all payments. Cash usage fell slightly, although remained the second most commonly used payment method. 

“These are trends we expect to continue over the next decade, alongside a continued decline in cheque use, and an increase in the number of people using remote banking.”