At a glance
- Cash use is falling, and digital payments dominate.
- But millions of people still rely on physical money, and a cashless future isn’t certain.
- Businesses should balance innovation with customer needs – which often means offering multiple payment options.
Cash use in the UK is gradually diminishing as the shift towards digital payments accelerates. However, research indicates that a cashless future is far from guaranteed.
In 2023, the UK recorded 6.0 billion cash payments, down 7% from the previous year and continuing a long-term downward trend, according to financial services trade association UK Finance. But this decline wasn’t a straight line. In 2022, cash payments actually rose.
“In 2022, growing fears about inflation and the rising cost of living led to some consumers increasing their use of cash as a way of managing a limited budget,” says Adrian Buckle, head of research at UK Finance. “This resulted in an increase in the number of cash payments made that year.”
This means we should not necessarily expect cash use to continue falling in a straight line, especially in an uncertain economic climate.
“Some people turn back to cash when consumer confidence is low and economic conditions are challenging,” says Buckle. “But then, once consumer confidence in the economy starts to recover, consumers tend to turn away from cash once again to other methods such as card payments.”
This suggests small businesses will thrive not by rushing towards a cashless future, but by building their digital payment infrastructure while remaining attuned to consumer preferences.
What the data shows
UK Finance’s research shows a transformation in the UK’s payment landscape over the past decade. Cash use has dropped around 70% since 2013, while debit card usage has more than doubled, surging past 24 billion transactions in 2023 to become the UK’s dominant payment method.
On the credit card, thanks
Faster payments and other remote banking methods have also grown steadily, reflecting increasing adoption of online and mobile banking solutions.
The overall trend is clear: the majority of UK consumers are embracing speed, convenience and digital-first banking.
However, Buckle notes that a significant group of people still depends on cash. UK Finance’s published research suggests 1.5 million people in the UK still use cash for most of their everyday spending, and 45.9 million withdrew cash from ATMs in 2023.
No law currently requires UK businesses to accept cash payments. But a recent YouGov poll suggested 77% of British adults would back a legal requirement for businesses to accept cash.
“People might be using cash less, but this doesn’t mean we are on our way to becoming a cashless society,” says Buckle.
“Cash is still the second most frequently used method of payment in the UK … This is why banks are committed to maintaining access to cash through banking hubs. The government has committed to opening 350 hubs by the end of this parliament.”
These developments illustrate the pressing need for businesses to evolve, but also to tread carefully, ensuring that digitisation moves at a speed that lets people adjust to it.
The risks and rewards of going cashless
The shift towards digital payments is not just about convenience for consumers; it can deliver real gains for small businesses too. From streamlining operations to improving compliance, embracing digital tools can help firms to grow efficiently and transparently.
Historically, cash-heavy businesses have been more difficult to monitor for under-reporting or tax evasion. Digital transactions create a transparent audit trail that reduces the scope for off-the-books activity, helping to level the playing field for compliant businesses.
However, despite these gains, concerns remain about cyber threats and system failures. Outages, payment processor downtime or broadband failures can paralyse operations in cashless businesses.
“People might be using cash less, but this doesn’t mean we are on our way to becoming a cashless society.”
Adrian Buckle, Head of Research, UK Finance
A cashless future would also expose small businesses to greater legal and compliance risks as they manage and secure customer data.
Perhaps most importantly, some consumers feel the move away from cash is shutting them out of the payments system. The Financial Conduct Authority has warned that elderly people in particular risk being left behind.
Embracing flexible payment options – including cash – not only improves businesses’ accessibility, but can also help their bottom line. Research shows small businesses offering multiple payment options increase revenue by nearly 30%.
According to Buckle, new infrastructure is being put in place to support businesses in striking this critical balance.
“Developments such as Open Banking and variable recurring payments are being used to provide additional functionality and choice in the way that we pay for things,” he says.
“There is also a huge amount of work and investment taking place to enhance the payments infrastructure, including exciting work looking at how central bank money, commercial bank money and electronic money can all operate together.”
What comes next – and how can accountants help?
By 2033, debit card transactions are expected to soar beyond 30 billion annually, according to UK Finance’s research, while cash usage is predicted to decrease by almost half from 2023 levels.
Faster payments, including mobile transfers, are projected to grow significantly, overtaking traditional methods like direct debit and credit cards. This reflects the increasing shift toward real-time, frictionless payments enabled by Open Banking and app-based finance tools.
Accountants play a key role in supporting small businesses through the shift towards flexible, tech-enabled payment options.
Accountants can help businesses identify the most appropriate digital tools for their operations, ensure compliance with data management legislation and build processes that are both efficient and secure.
Just as importantly, they can help businesses assess the risks of going fully cashless and offer advice on maintaining inclusivity without sacrificing innovation.
