Supposedly we only have two years left before cheque books are phased out completely. Well, that was the prediction by the board of the UK Payment Council in 2009, who at the time said there should be “no scenario” for using cheque books in 2018.
Although it was reported the decision would be greeted with disappointment by some small businesses and consumers, it seems as though very few will miss the cheque book when it has eventually gone. Fast forward 350 years since the first cheque was ever written, and less than one third of Britons actually still use them to make cash payments.
Only 31% of people in the UK have used a cheque book in the past three months, comparted to 40% in 2015. This means that cheques are now the least likely method Brits choose to part with their cash, according to research by Mintel.
Instead, the use of contactless cards has soared over the past year. While just 28% of Brits used a contactless debit card to make a payment in 2015, in the past year it has grown by 11 percentage-points to reach 39%. Similarly, usage of contactless credit cards has risen by six percentage-points to reach 34% of Brits, up from 28% last year.
However, while cheque books look set to be relegated to the history books, Brits aren’t yet ready to shed the pounds in their pockets. Mintel research indicates that over half (54%) of Brits are not comfortable about the potential for a completely cashless society, rising to three in five (61%) of those over the age of 45 and 68% of those over the age of 65.
Howard Berg, senior vice president at Gemalto UK & Ireland, said: “While it’s not a surprise to see that contactless payments are overtaking cheques, the fact that almost all Brits are still using cash highlights that we are still a long way from a cashless society. As long as cash is still seen as a convenient and secure form factor for consumers it will remain in use.
“Whilst we’ve seen many businesses increasingly adopt contactless and mobile payment infrastructure, there’s still some work to do in expanding the number of retailers who accept this convenient payment method and ensuring both retailer and customer confidence in contactless payment”.
Today, the use of pounds, pennies and notes is near universal with 97% of Brits having used cash in the three months to April 2016, making this the most common payment method. However, negative interest rates threaten the future of physical notes and coins as people start looking for alternatives to cash, one that may not even involve banks.
Rich Shepherd, financial services analyst at Mintel, said: “Part of the reason for the rapid increase in the use of contactless cards is the simple fact that they are now much more widely accepted. They’ve moved beyond coffee shops and sandwich bars and are now entirely commonplace.
“However, the real shift in behaviour has only come over the last few years. It’s easy to forget that contactless cards were first launched back in 2007, meaning that the technology has been on British high streets for almost a decade. People’s payment habits change slowly, as can be seen with the cheque’s stubborn refusal to disappear from the payments landscape.”
Are mobile phone payments the future?
The research reveals that mobile payments have been made by one third (34%) of smartphone owners in the 12 months to April 2016, with 17% using them to make a payment to a retailer using an online payment system and the same proportion (17%) using them to pay in a shop or restaurant.
However, the majority of people in the UK still have concerns over the security of their data when making a mobile payment. Over three quarters (77%) of Brits say that they would be concerned about the security of their data if their phone were to be lost or stolen. Similarly, 76% say that they are concerned about the risk that hackers might be able to make fraudulent transactions.
Aside from security, the majority of consumers are also concerned over the reliability and usability of mobile payments. Over half (56%) of Brits say that they would be concerned about being unable to access a clear digital record or receipt for the payments they've made, while 54% are concerned about being unable to pay for anything if their phone runs out of battery,
Over half of those with a smartphone, tablet or wearable device think it’s more convenient to pay for things using other payment methods rather than a smartphone anyway.
Mr Shepard added: “The fact that contactless payments took nearly a decade to become a mainstream payment method suggests that mobile services will go through a similarly extended journey to widespread use.”