The number of cash payments fell by 11% last year – but it remains the UK’s most popular method of payment.
Consumers and businesses made 15.4 billion cash payments in 2016, down from 17.2 in 2015 and represented 44% of all payments made by consumers.
UK Finance, which represents nearly 300 finance providers, said it expects the number of cash payments to fall by a further 43% over the next decade to 8.7 billion.
The total value of cash payments was £240bn in 2016 and is expected to fall by 23% to £185bn in 2026.
There were 11.6 billion debit card payments last year.
Figures from UK Finance show that cash is typically used for smaller purchases – 26% of all consumers payments were for a value of £1 or less and 61% were for a value of £5 or less.
Despite this, the average value of a cash payment has increased in the past decade from £11.58 in 2006 to £15.80 in 2016. UK Finance puts this down to inflation and the increasing use of cards to make low-value payments.
According to the report, 2.9 million consumers use cash rarely or not at all, representing 6% of the UK’s adult population.
Among younger consumers (those aged 25-34) that number increases to 10%, while there are 2.7 million people who rely almost entirely on cash to make their day-to-day payments.
Adrian Buckle, chief economist at UK Finance, said: “It is clear that over the past few years we have witnessed a significant shift away from cash use in this country with contactless cards undoubtedly causing a decrease in the use of notes and coins.
“However we don’t believe that the UK is on the verge of becoming cashless, as some reports have claimed.
“People will always want to choose the payment methods that best suit them and, for the foreseeable future, in lots of cases that will continue to be cash.”