Cash payments in the UK increased for the first time in a decade, due to economic uncertainty and the ongoing cost-of-living crisis which has stretched into a second year.

According to a new report from UK Finance, the number of cash payments increased to 6.4 billion in 2022 from 6 million the previous year. Yet the proportion of payments using cash fell from 15 per cent to 14 per cent.

The report found that debit cards are the most popular method of payment and saw an increase of 18 per cent. As a result, half of all payments in the UK were made using debit cards for the first time ever.

The number of contactless payments increasing by 30 per cent to 17 billion. Around 87 per cent of people made contactless payments at least once a month or more frequently. The average value of contactless payments lso rose in 2022 to £15.10, up from £12.66 in 2021.

The report added that the total number of payments in the UK last year increased to 45.7 billion, up from 40.4 billion in 2021.

UK Finance said that this could be attributed to changes in customer behaviour. People now make smaller visits to supermarkets instead of one big shop and working from home means people pay for individual journeys rather than buying a travel card.

Commenting on the news Adrian Buckle, head of research at UK Finance, said: “During 2022 we saw increased use of contactless, online banking and mobile payments, although cost-of-living challenges meant that some people preferred to use cash to help with their budgeting.

“There is a wide variety of payment methods available in the UK and each provides specific benefits to the people using them. Over the next decade we are forecasting further growth in the use of card and mobile payments and market developments such as Open Banking may bring further changes to the payments landscape.”

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