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.
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