A new report reveals that digital wallet payments have surged in Britain, driven by enhanced security features and higher spending limits, while cash usage continues to decline.
In 2023, digital wallets like Apple Pay and Google Pay saw significant growth in the UK, with 34% of consumers using mobile contactless payments at least once a month.
This marks the first time such a high rate of digital wallet usage has been recorded, according to a report by UK Finance and Accenture. The convenience and security of these digital payment methods are major factors in their rising popularity.
The report highlights a broader trend of declining cash usage in the UK. In 2023, cash accounted for only 12% of all payments, down from 14% in 2022.
Meanwhile, contactless payments, including those made via cards and mobile devices, comprised 38% of transactions. Chip-and-pin debit cards remained the most common payment method, making up 50% of all payments.
One of the key reasons behind the surge in digital wallet usage is its enhanced security features, such as biometric authentication. Additionally, digital wallets do not have the same £100-per-payment limit that applies to contactless plastic cards, making them more flexible for larger purchases.
“Just as credit and debit cards once offered a more seamless option than cash, digital wallets are quickly gaining market share,” said Sulabh Agarwal, global payments lead at Accenture.
The rapid growth of digital wallets has caught the attention of financial regulators.
The Payment Systems Regulator (PSR) and the Financial Conduct Authority (FCA) have launched an investigation into the competitiveness of digital wallets offered by companies like Apple, Google, and PayPal.
David Geale, PSR managing director, emphasized the need to understand the implications of digital wallets on competition, consumer protection, and market integrity.
Despite the rise of digital payments, cash remains a critical payment method for some consumers. Recent IT outages have underscored the need for a resilient digital payment infrastructure.
John Howells, CEO of Link, which operates the UK’s ATM network, noted that such outages highlight why cash is still essential. Researchers predict that while cash usage will continue to decline, it will remain important for those who prefer it.
