Forget notes and coins, an increasing array of payment options is revolutionising our wallets, and our lives. Vicky Shaw reports.
When was the last time your wallet was filled with cash?
This is a question I pondered recently, after being given a handful of loose change for the first time in ages and remembering – too late, as it turned out – that the section in my purse intended to hold coins contains a rather pesky hole.
There’s no doubt that many of us still find trusty coins and notes useful, and indeed an essential part of day-to-day life. But the rapid growth in different ways to pay has presented us with a new range of choices which means we’re now generally less reliant on scrabbling for cash stuck in the bottom of our wallets than we were a few years ago.
New figures from the Payments Council show that the number of non-cash payments being made in the UK overtook the number of cash payments for the first time last year. During 2014, 48% of payments made by consumers, businesses and financial organisations were in cash, down from just over half (52%) in 2013.
Some recent analysis by Halifax on the payment methods their customers are using found that cash withdrawals from current accounts make up just £18.33 for every £100 that people spend. Just a couple of years ago, cash accounted for £20.15 of every £100 spent. Meanwhile, debit card use now accounts for nearly £30 for every £100 spent.
So what exactly are these new ways to pay that have us ditching old-fashioned cash? And what can we expect the world of payments to look like in the future?
1. Contactless payments
Contactless payment – where someone can swipe their card on a reader instead of entering their Pin number – has grown rapidly. Last year was a record year for contactless payments, with a total of £2.32 billion being spent in this way in 2014 and consumers across the UK making around 10 contactless payments every second.
There are now around 58 million contactless cards in circulation in the UK, which is 52% more than there were in December 2013.
The current limit for a single contactless transaction is £20, but from September 1, people making contactless payments will be able to buy goods worth up to £30 with a simple swipe of their card.
The growing list of places that accept contactless payments includes Aldi, Barnardo’s, Boots, Greggs, Ikea, JD Wetherspoon, London Tubes, M6 Toll, Marks and Spencer, McDonald’s, the Post Office, Stagecoach and WH Smith.
2. Mobile payments
Mobile payment service Paym, which is being signed up to by banks and building societies across the industry, was launched just over one year ago. More than two million consumers’ mobile numbers are now registered to receive payments through the service. Paym helps people to transfer cash via their mobile simply by using the recipient’s phone number rather than needing their bank account number and sort code. The average value of a transaction being made through Paym is £55. A similar mobile payments service to Paym, called Pingit, was launched by Barclays in 2012 and is available to Barclays and non-Barclays customers.
So that’s for now, and here are some payment methods we could be seeing in the future…
3. A handy way to pay
Barclaycard has been developing pairs of contactless “tap and pay” gloves.
The prototypes which have been trialled would mean shoppers could wave goodbye to putting down their shopping bags and rummaging through their wallet to find their card when they get to the till. Instead, they would be able to make a transaction by touching the back of their hand on the contactless reader, while keeping their hands warm by wearing the gloves.
4. Money in a heartbeat
Halifax has been trialling technology which would allow mobile banking customers to use their heartbeats to log in to check their finances. It’s been exploring the possibility of customers wearing wristbands containing sensors which would be able to pick up their heartbeat and use this as a way of logging in to their mobile phone banking rather than having to enter a password. The band would be connected to the consumer’s smartphone via bluetooth and as each person’s heartbeat is unique it would naturally provide a strong protection against fraudsters, Halifax has said.