Have UK payments reached 'peak digital'?

The narrative around digital payments in the UK has long been one of relentless growth and inevitable dominance. From contactless cards to mobile wallets, the assumption has been that cash would gradually fade into obsolescence as digital alternatives became more convenient and ubiquitous. However, the FCA's Financial Lives 2024 survey suggests we may be approaching a different reality: digital payment adoption has reached its natural limit, leaving a substantial and persistent core of cash users who will continue relying on physical money for years to come. This presents a new narrative for the future of payments and the role of cash and brings into question the success of digital payment innovation. 

The Cash Plateau and Digital Ceiling

The survey found that 2.6 million adults (4.8%) were heavy cash users. This is down from 5.8% in 2022. This is no surprise as we know that people are using cash less in favour of digital options, and this will naturally result in there being fewer heavy cash users. 

However, what might come as a surprise is that there’s only been a 1% increase in people who made a contactless payment using a debit or credit card or mobile phone. This has increased from 91% in 2022 to 92% in 2024, which is a major slowdown in adoption in comparison to 84% in 2020 and 63% in 2017. 

The survey also found that when asked what payment method people used to buy everyday items in shops, 17% selected cash, only 1% lower than in 2022. This is interesting as it suggests more regular use of cash than the heavy user figure suggests. The results show that for everyday items debit cards have fallen in popularity by 10% (from 51% -41%) but this has been replaced with a 9% increase in mobile payments (from 11% to 20%). 

This implies that we have moved on from the rapid decline of cash and digital adoption witnessed in the UK over the past decade. Those who remain as cash users aren't simply laggards waiting to be convinced by better technology, they represent a fundamentally different category of consumer with structural, not preferential, reasons for cash dependency.

The Four Pillars of Persistent Cash Use

The survey identifies four core motivations for continued cash use that suggest permanence rather than transition:

Financial Control and Budgeting: Reasons why heavy cash users continue to use cash include budgeting or debt avoidance. This isn't a technological preference but a financial management strategy. As one survey respondent, Errol, explained: "When I use Direct Debits, I can't control what I'm doing as accurately as I can when I'm getting bills and paying in cash." This represents a sophisticated understanding of behavioural economics—using the physical friction of cash to impose spending discipline that digital payments, by design, remove.

Trust and Privacy Concerns: 47% of heavy cash users cite trust or privacy reasons, with 39% trusting cash more than digital alternatives. These aren't concerns that can be solved with better apps or stronger encryption. They reflect fundamental differences about financial privacy and control that technology cannot address without compromising the very convenience that makes digital payments attractive.

Accessibility Requirements: The survey includes the powerful story of Joyce, who has severe tremors that prevent reliable use of touchscreens and PIN entry. For people with motor difficulties, visual impairments, or cognitive challenges, cash isn't a choice, it's often the only accessible payment method. As the population ages and disability awareness grows, this group may expand rather than contract. 

Economic Marginalisation: The demographics of cash users—24% of digitally excluded adults, 15% of those with no qualifications, 11% of low-income households—suggest that cash dependency is often linked to broader socioeconomic factors that digital innovation cannot resolve.

The Infrastructure Feedback Loop

Perhaps the strongest evidence for a persistent cash core lies in the infrastructure dynamics revealed by the survey. Despite declining usage, 26% of account holders found it more difficult to withdraw cash due to closures, with 59% of heavy cash users affected. This creates a concerning feedback loop: as infrastructure disappears, access becomes harder, potentially forcing some people out of the cash economy against their will.

However, the persistence of this core group despite infrastructure pressures suggests remarkable resilience in cash demand. When faced with reduced access, heavy cash users adapt by traveling further (21%) or paying fees (6%) rather than abandoning cash entirely. This behaviour indicates that for this group, cash serves needs that digital alternatives simply cannot meet.

The Limits of Digital Convenience

The technology industry's assumption has long been that digital payments would eventually become so convenient and universal that cash would become obsolete. However, the survey suggests this misunderstands the nature of the remaining cash constituency. For many, cash's value lies not in convenience but in its limitations—its inability to enable overspending, its privacy, its universal acceptance without technology dependence.

Thomas from Wales captured this perfectly: "Why do you have to use a card for a cup of coffee? Really—do you want a bank statement at the end of each month with 500 transactions on there?" This isn't technological resistance; it's a preference for financial simplicity that digital payments, with their detailed tracking and seamless spending, actively undermine. This is something that many in the world of digital payments don’t understand. What seems irrational to one person, makes perfect sense to another. 

Conclusion: Coexistence, Not Displacement

The evidence suggests we're entering an era of payment system coexistence rather than digital displacement. Digital payments have captured the majority of transactions and users they're likely to capture without too much convincing. What remains is a core of approximately 2.6 million heavy cash users whose dependency stems from accessibility needs, financial management strategies, privacy concerns, and economic circumstances that digital innovation cannot address without fundamentally changing what makes digital payments attractive. There’s also the 17% of people who, while not wholly reliant on cash, choose to use it for everyday items over digital alternatives. 

The persistent cash core and regular user isn't a market failure or a temporary holdout—it's a permanent feature of a mature payment system. Recognition of this reality should shift policy focus from managing cash's decline to ensuring sustainable coexistence between digital and cash payment systems. The future of payments in the UK isn't cashless; it's a dual system where digital payments dominate transactions while cash serves essential functions for a significant minority who need it most.

Rather than asking when cash will disappear, we should be asking how to maintain a payment ecosystem that serves everyone effectively—both the digital majority and the cash-dependent core who will likely be using physical money for decades to come. This requires fresh thinking on how we approach the issue of access to cash. The key barrier to this is costs, which is leading to the contraction of cash infrastructure. But it doesn’t have to be this way. A lower cost alternative is available by utilising open banking, an option that’s operational in the UK but only by a few players. Exploring cash through this route, which also extends to the outcome of the National Payments Vision, holds the key to ensuring that cash can coexist with digital payments, providing an inclusive and innovative payments system that benefits everyone.