Debit cards remain the most common form of payment in the UK, but account for less than half (48 percent) of all payments. 

However, debit card transactions are growing by over 23 percent year on year, and reached a total of 19.5 billion payments in 2021. 

The findings come from trade association UK Finance, which has published its latest Payment Markets Report, covering 2021 and its forecast for the decade ahead.

Card payments of every kind, including credit, now account for 57 percent of transactions, it says.

Meanwhile, nearly one-third of all payments are now made using contactless methods, including cards and phones.

In terms of consumer-only purchases, 58 percent are contactless.

The speed and security of contactless transactions makes them popular with consumers, says the organisation, aided by an increase in the payment limit to £100 in October last year.

“Retailers encouraged the use of contactless during the pandemic as a way of helping to facilitate social distancing in shops,” explains UK Finance. 

Wireless card readers have also become more widespread, especially among smaller businesses, including taxis, ride-share schemes, cafes, and bars, some of whom link their devices with smartphones and mobile banking services.

Well over half of UK adults (57 percent) now use mobile banking, says the report.

The figures also reveal that the UK is an increasingly cash-free society. The number of cash payments fell by 1.7 percent in 2021, says UK Finance, but still total six billion a year.

Cash is dwindling in popularity, partly due to the significant behaviour changes brought about by Covid restrictions and pandemic lockdowns. 

However, the trend for cash payments has been downward since 2011: Covid merely accelerated that trend, just as it did with the adoption of cloud services and remote or flexible working.

“We expect cash usage to continue to fall, and by 2031 cash will account for six percent of all payments made in the UK, says UK Finance. 

But it adds, “Rather than the UK becoming a cash-free society over the next decade, the UK will transition to an economy where cash is less important than it once was, but remains valued and preferred by many.”

For the first time, the report also includes data on Buy Now Pay Later (BNPL) schemes. According to the latest research, 12 percent of people used BNPL services last year.

Meanwhile, Faster Payments is the most frequently used method by business customers, overtaking Bacs Direct Credit, says UK Finance.