The use of cash is on its way out, according to the Payments Council, which cites debit cards as the preferred payment method.

Cash payments are on the way out as more and more people choose to pay for items by credit or debit card, according to the Payments Council.

Developments such as internet shopping, contactless payments, and the demise of the cheque have all contributed to fewer cash payments. In 1999, transactions using cash accounted for 73% of all payments, this decreased to just 59% in 2009 and is predicted to drop to 45% in 2018.

Debit card spending increased by £199 million over the last decade, and spending cash in pubs is likely to drop 65% by 2018 – in 1999, nine out of ten pints were paid for in cash, now only 40% of pub spending is made in cash.

Mike Bowman, Head of Policy and Markets at the Payments Council, said: “More and more people have opened bank accounts in the last ten years, and fewer and fewer have jobs in manufacturing where a weekly wage packet is more common. As a result far fewer of us get wages cash-in-hand.

“Although cash won’t disappear in our lifetime, the continuing payments revolution will make it an ever smaller part of our spending.  Even the traditional sight of people waving tenners at the bar is fast vanishing.  They’re more likely to brandish their debit cards now as they compete to get served. ”

The phasing out of cheques from the market by 2018 reflects its current decline in use – just 0.8% of retail transactions are now made by cheques. It is predicted that the use of debit cards will flourish in the future, overtaking even credit cards as the most-preferred method of payment. According to the Payments Council, by 2018 one in four of all transactions will be by debit card, up from just one in twenty in 1999.

Bowman commented: “Contactless payment for small purchases has the potential to drive debit card usage even higher. With 18 billion cash transactions less than £15, there’s a huge opportunity for us to replace billions of these with a quick swipe past a card reader.”