Cash or plastic? What’s your preferred payment method and why virtual cards may prove best
You may find it hard to believe, but it’s more than 20 years since chip and pin payments were introduced to the UK.
Now, as bank branches are slowly disappearing from the high street, you can quickly and easily scan a card or even your phone to make a payment.
According to the European Central Bank, while digital payments are on the rise, cash remains prominent. Research revealed that:
- In stores, cash is the most frequently used payment method, although use has declined
- Share of digital payments continues to increase – cards are still dominant and use of mobile apps is rising
- Most consumers still value the option to pay with cash.
No doubt you already have a preferred method of payment, but read on to find out why we should pay attention to the ongoing, and evolving, cash v plastic debate.
Cash is king, isn’t it?
Despite the growing number of digital transactions, many people prefer to spend physical cash.
Using coins and notes can help you stick to a budget, and avoid the temptation to swipe and forget.
There’s also an aspect of privacy that shouldn’t be overlooked. While it may feel far-fetched to label it a conspiracy, banks and governments have an increasing ability to track what we’re spending and what on.
Ultimately, paying in cash prevents “big brother” from looking over your shoulder.
That said, you may have noticed ATM’s near you have stopped dispensing cash. Certainly, we’re aware of several different cash machines that haven’t been stocked with cash for months – often located outside supermarkets and other shopping outlets.
Despite this, Nationwide reports that cash usage and ATM withdrawals increased for the third consecutive year. In 2024, Nationwide ATMs dispatched almost 33 million cash withdrawals.
Otto Benz, Director of Payments at Nationwide Building Society says: “The resurgence of cash shows why we need to continue having a physical presence on the high street, enabling customers to access their money on their terms, whether digitally or in branch.”
These figures from the biggest building society in the UK prove the point:
Source: Nationwide
Paying by card is quick and easy, and can come with added benefits
Contactless payments have made paying by card even more convenient. Showing your plastic, or presenting your phone using your virtual bank card, Apple Pay or Google Pay, and you’re all set.
Love them or loathe them, self-checkouts have made it even quicker and easier to pay and exit a store. Plus, since they tend to favour card payments over cash, there’s rarely a need to queue more than a minute or so to check out your purchases.
Credit and debit cards are also relatively secure and it’s quick and simple to freeze the card in case of theft, or you lose your wallet.
When it comes to budgeting, online banking means you can view your card transactions within moments of making a payment. So, it’s easy to keep track of your spending and monitor your bank balance in real time.
Speed and efficiency are winning perks on their own, but spending on your card often comes with added rewards and benefits.
If you keep on top of monthly credit card payments and remain debt-free, it’s possible to earn perks worth hundreds of pounds every year. These days, many banks also offer cashback deals when you use your debit card.
Here are three cards highlighted by MoneySavingExpert:
- Chase debit card – gives you 1% cashback on most spending (£15/month maximum), though there are some exclusions. After a year, you need to pay in £1,500/month to continue receiving cashback.
- Amex Cashback Everyday credit card – offers 5% cashback, usually only for purchases in the first three months (up to £100), at the moment (March 2025), this has been extended to five months, for spending up to a maximum of £125. After this you can get up to 1% cashback, though you need to spend more than £3,000 on the card every year to get any cashback – helpful if you spend a lot on your credit card or are planning a large purchase.
- Amex Preferred Rewards Gold credit card – offers newcomers bonus intro points worth £115 in vouchers for Amazon, M&S, Sainsbury’s, and more. To benefit you need to spend more than £3,000 in the first three months. So, again, it may only be suitable if you regularly spend a lot of money using your credit card or have a big purchase coming up.
Of course, this is only a very small sample of the kind of perks available. If you’re a frequent traveller, Harj will be quick tell you how many Avios points it’s possible to collect and all the potential savings and benefits you can claim when booking flights…
You may be charged an annual fee. Plus, when using a credit card, if you don’t pay your card off every month you could find yourself loaded up with high-interest debt. Left unchecked this may quickly spiral out of control.
Virtual cards are rising in popularity due to their enhanced security and high degree of privacy
If you prefer card payments to cash, it may be time to consider going virtual.
Virtual cards work exactly like your physical bank card. Instead of living in your wallet, they exist in your phone’s digital wallet.
Your virtual digital card can be a copy of your physical bank card which is stored on your phone. It will have the same card number, expiry date, and security CVC code as your physical bank card and can be used with Apple Pay or Google Pay.
Alternatively, you could use disposable virtual cards, that you can only use once, and can be used for both online and in-store payments.
Because these single-use virtual cards are secured by encryption, they rank very highly when it comes to security.
A good option if you’re tech savvy, as well as being highly secure, virtual cards can also help you manage your spending, allow you greater convenience, and simplify online shopping.
Virtual cards can be especially useful when:
- Signing up for TV streaming services such as Amazon Prime or Netflix
- Subscribing to food delivery services, like Just Eat, HelloFresh, or Blue Apron
- You want to keep a card on file online stores you purchase from often such as Amazon or Ocado
- Purchasing from a brand new site – to disguise your actual card number and increase the security of your payment
- Travelling or booking holidays – many virtual card providers allow you to spend in different currencies for relatively low fees.
Get in touch
Spending and budgeting is the cornerstone of good financial planning. And with ever-evolving payment methods emerging, you may wish to rethink how you handle your everyday payments and finances.
If you’d like to discuss all the payment options available, and learn how you may benefit from adapting to virtual cards, we’ll be more than happy to answer your questions.
Please email info@logicfinancialservices.co.uk or check with your adviser.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
