Cashless payments have become more popular than transactions using coins and notes for the first time, figures from the Payments Council show.
During 2014, 48% of payments made by consumers, businesses and financial organisations were in cash, down from just over half (52%) in 2013.
The Payments Council said that this marked the first time that the number of non-cash payments has overtaken those made with cash, reflecting the growth in technology and the use of debit cards as a handy way to pay.
Despite the shift, cash remains king among consumers, who used it for 52% of all their payments in 2014. But even among consumers, the Payments Council said that the number of payments being made in cash is expected to fall below half in 2016.
The growth of online shopping and the emergence of new payment methods such as mobile and contactless payments have challenged the dominance of cash in recent years.
Around three-quarters of Britons now shop online, compared with just over half in 2008, according to a recent report from the Office for National Statistics (ONS).
Contactless card payments, where a payment can be made with a single swipe of the card rather than having to enter a Pin number, are also becoming increasingly widely accepted, in places including Aldi, Barnardo's, Boots, Greggs, Ikea, JD Wetherspoon, London Tubes, M6 Toll and Marks and Spencer.
Currently, the limit for a single contactless transaction is £20 - but from September 1 onwards a higher limit of £30 will be rolled out.
Meanwhile, mobile payment services such as Paym, which is overseen by the Payments Council, and Pingit, which was launched by Barclays in 2012, continue to grow in popularity.
The tipping point for non-cash payments overtaking cash in the UK has come slightly earlier than the Payments Council had previously expected, as 2015 had been pencilled in as the year when non-cash payments would edge ahead.
But its new figures show that, in fact, 2014 turned out to be the year when the number of non-cash payments started to eclipse the number of transactions using cash.
During 2014, 18.3 billion payments were made with cash, while 19.8 billion were made using another method. In total, around £250 billion-worth of payments were made using cash in the UK in 2014.
The Payments Council emphasised that this is not the beginning of the end for cash, with many people still heavily reliant on the notes in their wallet.
Its forecast for 2015 is that there will still be 17.9 billion cash transactions, while the number of non-cash transactions will grow to 20.4 billion.
Even in 2024, 12.7 billion payments are still expected to be made in cash, alongside 28.8 billion non-cash payments.
Nearly 47 million people used a cash machine last year and nine in 10 (91%) consumers withdraw money from an ATM at least once a month.
According to UK cash machine network Link, the number of cash machines across the country increased to a total of 69,382 by the end of 2014.
Graham Mott, head of development at Link, said: "Cash machine numbers are now at a record high and Link is committed to continuing to make sure everybody has safe, reliable and easy access to their cash."
The Payments Council said that consumers accounted for 99% of the 18 billion-plus cash payments made in the UK last year. The majority of these payments were made in the retail, travel and entertainment sectors, reflecting a need for convenience as well as the continuing presence of businesses that prefer to be paid in cash, the payments body said.
In 2014, 1.6 million consumers predominantly used cash, representing 3.1% of all adults.
Of those who heavily rely on cash for their day-to-day life, nearly 40% are aged 65 and over, the Payments Council said.
Meanwhile, 2.3 million people rarely used cash, representing 4.4% of all adults. More than half of those who rarely use cash are aged under 35 years old.
Is the move towards a cashless society a good thing? Do you think it is secure enough? Share your thoughts in the comments section below.
10 things your bank doesn't want you to know
Cashless now more popular than cash payments
Once you have opened a current account with a bank or other lender, you will get a steady flow of emails, letters (and maybe phone calls) offering you a savings account, loan, mortgage, ISA etc to go with it. But while it may be tempting to have everything in one place, it's better to do the legwork and shop around for the best financial products. You can compare interest rates on loans and savings accounts in the 'best buy' tables in the newspapers, or look online on comparison sites. Remember you can still easily transfer your money between accounts, even if they are not with the same financial institution.
Whether you want to apply for a new mortgage or refinance an existing one, your bank will probably be very happy to give you an instant quote in the hope that you will go with them. They may not tell you that you can shop around at other lenders. A mortgage broker can give you an overview of the best interest rates on offer, and might be able to cut you an even better deal him/herself.
Want to cash in your jars of change that are sitting on your shelves at home? Many banks are not very keen on coins. They often only take it from their own customers. You will have to sort it into different denominations and put the coins in the bank's bags in set amounts (for example, £1 for coppers, £5 for silver, etc). Some banks only take a limited number of bags a day, or won't take any at busy times. Others take a different view: HSBC has free coin deposit machines in many larger branches where you pour your jar of coins into the machine and it counts them and automatically credits your account. Barclays, NatWest and RBS also have machines in large branches in city centres.
Bank employees now have a duty to point out that they only advise on the bank's products and don't offer independent financial advice. What they won't tell you is that even the advice they give you about the bank's own products should be treated cautiously. Bank staff are often undertrained, underpaid and overworked. (You could ask for the employee's qualifications before getting advice.) So do your own research and/or find an independent financial adviser.
Nothing is set in stone. Your bank won't tell you this, but sometimes it will waive a fee, for example an overdraft or an ATM fee, depending on the circumstances. You have nothing to lose by asking, if you can argue persuasively why they should waive the fee. Citizens Advice says your bank should treat you sympathetically if you can show financial hardship.
As stated in the previous slide, some things are negotiable – such as interest rates or waiving fees – if you can make a good case for it. In that instance, talking to an employee in person is better than filling in a form online.
If your account is overdrawn and you get paid, your bank could use this money to pay off your overdraft without your permission. However, you have a right to ask them not to do this so you can pay your rent or mortgage first. This is called first right of appropriation. You have to ask your bank in writing, and you'll need to write to them with new instructions every time money gets paid into your account. Make sure you write 'first right of appropriation' in your letter.
If money is mistakenly credited to your account, your bank or building society can recover the money, assuming they do this within a reasonable time. But you may be allowed to keep the money, for example if you didn't realise the bank had made a mistake and spent the money in good faith. You would have to prove that you spent it in such a way that it would be unfair to ask you to pay it back. You can complain to the Financial Ombudsman if you think your lender is being unfair in asking you to repay the money.
If you do have to pay it back, you could try to reach an agreement with your bank to pay it back in instalments without interest being added.
The Financial Ombudsman Service has more advice on what happens when payments have been credited to the wrong account. If you did something wrong - for example, by entering the wrong account number - rather than the bank, the Financial Ombudsman may still uphold your complaint. They consider whether the financial institution made it clear to the consumer that only the bank sort code and account number are used to process the payment, rather than the name of the payee. They will also ask whether the lender should have realised that the consumer had made mistake, and once the problem came to light, did the firm take reasonable steps to try to get the money back from the recipient.
If too much is deducted from your account, your lender may have to refund the full amount of the payment. For example, if the money is taken through a direct debit or credit card payment for a hotel room or car rental. When deciding whether the debit was reasonable, the bank or building society will take into account your previous spending pattern. But the bank doesn't have to refund the payment if you agreed the amount beforehand or were informed of the payment by your lender at least four weeks before.
If you don't have enough money in your account to cover a direct debit payment, your bank may not make the payment. It doesn't have to tell you that the payment hasn't been made, so the onus is on you to keep checking your account. If, on the other hand, the payment goes through, you may be charged for an unauthorised overdraft.