Physical Wallets Are Shrinking in Relevance in UK, Claims Survey Commissioned by Mastercard

The timing is convenient coming just as Mastercard is piloting a biometric-authenticated payments system in the UK, which will require digital, not physical, wallets.  

In the almost total absence of public debate — and in many cases, even public awareness — about the roll out of biometrically enabled digital identity and payment systems, what little debate that does occur is largely informed by surveys and opinion polls commissioned by the very firms that stand to benefit most from the roll out of the new systems.

A case in point: Mastercard, the world’s second largest payment processing company, recently announced the findings of a survey it had commissioned into payment trends in the UK, one of Europe’s most cashless economies. Unsurprisingly, those findings point to a yet further decrease in cash usage in the UK, which aligns perfectly with Mastercard’s broader goals, exemplified by its current slogan: “World Beyond Cash”.

Around 60% of payments in the UK were made using cash a decade ago. By 2021, with the COVID-19 pandemic raging, that figure had slumped to 15% and could fall as low as 6% by 2031, according to estimates from banking lobby group UK Finance.* The Mastercard survey highlights a corresponding increase in the adoption of digital payment methods globally, with 93% of survey respondents saying they will consider using alternative means of payment such as contactless, QR code, biometrics, and cryptocurrency transactions in the next year.

Shrinking Wallets

Apparently one of the main findings of the survey is that 51% of consumers believe that physical wallets — those leathery or faux leathery things we keep our cash and cards in — will lose relevance in the coming years as digital payment alternatives gain further traction. Twenty-one percent said they don’t expect to carry a wallet or purse within the next five years. This increased to 38% among Millennial respondents.

For the moment, generational trends are not on cash’s side. A third (31%) of the 18-24 year-old respondents said that the digital wallet on their phone is their preferred way to pay, compared to just 5% of those aged 55+, more than half (55%) of 18-34 year olds would rather just carry their phone in place of a wallet or purse, and 41% of Gen Z say they don’t expect to ever buy a physical wallet or purse again.

“In contrast to a decade ago, many who still carry wallets are now seeing them more as a site of personal archive rather than a vessel for physical cash and cards,” said Kelly Devine, president of UK and Ireland at Mastercard. “As technology continues to evolve, wallets shrink, and people increasingly embrace digital methods of payment, our focus remains on delivering choice, convenience, and speed for people around the country.”

Given Mastercard’s main line of business since its founding in 1966 has been credit and debit cards, which are invariably stored in non-digital wallets, one might assume that this would be bad news for the company. But apparently not, for Mastercard is in the process of reinventing itself, and indeed has been for years. As part of that process, it is piloting a biometric-authenticated payments system in the UK, albeit after first testing the system in Brazil, the Middle East and Asia.

As I reported in Mastercard Pushes Biometrics Even Harder on Consumers in Increasingly Cashless UK, the company ultimately wants to roll the program out worldwide to small and large retailers.

Card payment giant Mastercard appears to be determined to wean consumers off not only cash, its eternal rival, but also credit and debit cards, its main line of business until now. To that end, it is about to launch a pilot “biometric checkout program” in the UK. The so-called “Smile to Pay” system will allow shoppers to purchase goods and services in store by smiling into a camera or waving their hand over a reader and is optional for the moment.

The UK is already the fourth most cashless economy in Europe, according to research by personal finance website In 2017, debit card payments overtook cash for the first time.

Mastercard is also staking a claim to a wider role in the emerging biometrics payments ecosystem. Ajay Bhalla, Mastercard’s president of cyber and intelligence, told the FT that Mastercard could act as the “enabler of the ecosystem”, setting unified privacy and security standards for a technology that has raised concerns among privacy activists and data protection campaigners.

Biometric Payments “Ecosystems” in Africa

Mastercard already has extensive experience of developing biometric payments “ecosystems” in other parts of the globe — most notably Africa. In December, the U.S. International Development Finance Corporation (DFC) pledged $50 million to support financial institutions and service providers that work with Mastercard’s Community Pass network, which is already up and running in remote areas of Mauritania, Uganda, Kenya, Tanzania and Mozambique.

At the same time, the company has been helping to fund the activities of the Better Than Cash Alliance, a UN-hosted partnership of governments (all of them in the so-called “Global South”), companies and international organizations. Funded by the Bill & Melinda Gates Foundation, Citi, the Ford Foundation, Omidyar Network, the U.S. Agency for International Development and Visa Inc., its mission, in its own words, is “to accelerate the transition from cash to digital payments globally.”

Mastercard has also played a key role in developing the Nigerian government’s all-encompassing digital ID system. The so-called National Identification Number (NIN) is ostensibly intended to enable easier access to public and private services as well as tackle the insurgency in the north east of the country. Much of the funding for the program, initiated in 2014, came from the World Bank’s Identity for Development (ID4D) program, founded with seed money from the World Bank, the Bill and Melinda Gates Foundation (again!), the French, British and Norweigan governments and the Omidyar Network (again!).

As of March 31, 2022, some 73 million adults did not have a national identity number, with many citing privacy concerns. A month later, the government barred all 73 million of them from being able to make outgoing calls or send outgoing texts from their mobile phones, until they got with the program.

Yet citizens’ concerns are more than warranted. As the NYU School of Law’s Center for Human Rights and Global Justice (CHRGJ) warned in a report last year titled, Paving the Digital Road to Hell: A Primer on the Role of the World Bank and Global Networks in Promoting Digital ID, “digital ID systems can lead to a wide range of urgent human rights issues.” They include, but are not limited to, “the violation of the right to nationality; limiting access to health care, food, and social security; a multitude of concerns about privacy and data protection, surveillance, and cybersecurity; and fundamental changes to models of democracy, participation, and citizen-state relationship.”

Nigeria’s government is yet to enact a data protection law, despite having had access to and control over the biometric data of tens of millions of Nigerian citizens for the past eight years. So too, for that matter, has Mastercard. In September last year, the World Bank finally made the enactment of a data protection law a prerequisite for release of further funds for the program — a mere eight years too late.  

Backlash Begins in UK?

The roll out of biometric-authenticated payments is just the latest example of the accelerating encroachment of biometrics into everyday life. Most national passports these days include biometric identifiers. Meanwhile, hundreds of millions — perhaps even billions — of people have volunteered their digital fingerprints or face scans to log into their smartphones and other digital devices.

In other words, people are already offering up their most private data to communicate, work, cross borders, or board planes. Governments across the Global North, from the EU to the UK, to the US, Canada and Russia, are now scrambling to roll out biometric-enabled digital identity programs. But are consumers in the UK (and elsewhere) ready to ditch cash and the contactless cards to which they have grown so accustomed, not to mention the wallets they use to store them in, and begin transacting with parts of their body instead?

Mastercard would certainly like to think so, arguing that the gains in time and convenience will be well worth the sacrifice:

“No more fumbling for your phone or hunting for your wallet when you have your hands full – the next generation of in-person payments will only need a quick smile or wave of your hand. The trusted technology that uses your face or fingerprint to unlock your phone can now be used to help consumers speed through the checkout. With Mastercard’s new Biometric Checkout Programme, all you will need is yourself.”

But the minor gains in convenience and time may be losing their allure while the negative effects of replacing humans with (imperfect) technology grow ever larger. Payments using gestures have struggled to gain widespread traction among consumers in the UK, the Financial Times reported in 2021. Last year, even Amazon paused its roll out of self-service stores in the UK due to lagging sales. Many of the Fresh stores already in existence had been under-performing, and the costs of building new ones ended up being too much, Business Insider reported in August.

A backlash has also begun against the proliferation of self-checkout tills in other supermarkets. In September last year big-4 grocer Tesco came under fire after announcing plans to ditch the majority of its manned checkouts from many of its larger stores. An online petition with nearly a quarter of a million signatures demanded that the company “stop replacing people with machines”. According to the Guardian, a similar backlash has been sweeping the US (would be great if US-based readers could share their experiences).

Public frustration is seemingly on the rise with technologies that are being used to turn customers into unpaid employees, with little in the way of actual benefit to themselves. Then there are the myriad unintended consequences, such as inaccessibility issues for disabled customers and a sharp increase in shoplifting and fraud. This, in turn, has prompted desperate measures from retailers. In December, the supermarket chain Sainsbury’s sparked outrage among customers after installing barriers and receipt scanners that required customers to show proof of purchase to leave the store.

As one customer seethed, “Essentially they are holding [people] hostage against their will as they refuse to let people leave without scanning a receipt that not everyone chooses to get in the first place. What will they do? Hold someone hostage and rifle through bags before releasing you?”

The ultimate irony is that self-checkout was meant to make the shopping experience quicker and easier as well as make shoplifting more difficult. It is also supposed to be more hygienic, yet a recent study by the UK-based Infection Innovation Consortium found that self-checkout samples had one of the highest bacterial loads.


* Worth noting that the UK Finance data does not reflect a slight resurgence in the use of cash in 2022. New data published today (Jan 17) by LINK, the UK’s cash access and ATM network, reveals that cash withdrawals from ATMs in 2022 increased by £4bn to £83bn. But they are still sharply down on the £115bn withdrawn in 2019.

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  1. Lexx

    ‘Around 60% of payments in the UK were made using cash a decade ago. By 2021, that figure had slumped to 15% and could fall as low as 6% by 2031, according to estimates from banking lobby group UK Finance.*’

    I don’t know ’bout y’all, but if I actually had to carry around cash to pay for everything, that would make me a easy target for mugging. We were rather forced to use credit cards as the prices kept going up and POS further and further away*. So that would be alot of cash in the hands of consumers every payday. My wallet can comfortable hold about $160 in twenties; the same amount I pull out at the ATM every two weeks. Forty stays in the wallet, $120 feeds ‘The Stash**. Small change gets dump into a container until it’s full, then collected and spent.

    * Inflation… ‘it’s not just a crisis, it’s also an opportunity’.

    **’The Stash’ is used for medium large purchases of the gifting sort, hidden from Husband’s inquisitive eyeballs. The current Stash is up to $1200 toward an 18” Jet drum sander… no, he doesn’t read NC.

    1. lyman alpha blob

      I prefer to pay with cash, and like you, I just don’t carry much of it at any one time in my wallet. It’s not that one should have to pay in cash, it’s that it should be an option along with credit cards, etc.

      I’ve never been mugged, but if I were, I’d much prefer that the mugger take my cash and leave the rest rather than taking my phone so they can access my “digital wallet”, along with one of my fingers needed to access said wallet.

  2. KLG

    “Public frustration is seemingly on the rise with technologies that are being used to turn customers into unpaid employees, with little in the way of actual benefit to themselves.”

    Yes. My “new” Publix (large supermarket chain) has self-checkout, which I never use. Customer service at Publix has been good, generally. It is an employee-owned company of a sort, and this has made a difference compared to the other large chain in town (Kroger, to be used only in emergencies). One does wonder if this will last. The last time I was in a Costco my receipt was checked on the way out. Membership has lapsed and I haven’t been back, but that is because the trip is too long from where I live. I also never need a 5-pound box of Cheerios.

    1. Nick Corbishley Post author

      Thanks KLG. Here in Barcelona only one out of five or six supermarkets in my immediate neighbourhood has self-checkout. Every time I visit my native UK I’m amazed at just how pervasive the self-service infrastructure has become.

  3. The Rev Kev

    This would have to be part of a two-part campaign. What I mean is that my wallet is thick with plastic cards – along with some cash. So some way is going to have to be found of getting rid of them to remove the demand for having a wallet. And that is where mobile phones come it. There would have to be a future campaign of putting all cards on mobiles as apps. So as all your cards go, then there will be no reason to carry money in a wallet as that will be on your mobile as well. No wallets, no need for pockets they will say which means that your clothes will look better on you. Yeah, I know that that sounds stupid but I would not be surprised to see this used as a selling point. Of course this all increases the number of critical failure points that can blow up the whole system in a systems failure but us muppets will be told to deal with it when, not if, it happens.

  4. Burritonomics

    “The so-called “Smile to Pay” system will allow shoppers to purchase goods and services in store by smiling into a camera or waving their hand over a reader and is optional for the moment.“

    Let’s see those smiles!

    Good Lord, NO

      1. Terry Flynn

        Not gonna happen. I live in one of the “red wall” constituencies that if the UK Conservatives lose at next election they lose power. I shop for myself and as primary carer for mum. The two biggest “extremes” of the spectrum in terms of socio-economic standards of typical customers round here (Sainsburys and ASDA) both show same phenomena and I literally overheard most recently 3 days ago an elderly customer of the type who turned the seat blue in 2019 say “self-checkouts kill jobs – not touching them”. Plus you need to both have small shopping load and very carefully bag lightest items first making sure you press hard enough so the sensor works to avoid the dreaded error.

        Cash is still king round the majority of the constituency, except for public transport and small purchases (contactless). Since card issuers have AUTOMATIC rejection of contactless after a certain number of such transactions to prevent fraud, a lot of people who never liked chip and pin won’t do contactless either. (USians should know that magnetic stripes are unacceptable in most places and most recently issued cards in our family don’t even have them).

        Queues for staffed checkouts are the longest they’ve been since the late 1970s and take up of self-checkout has rapidly dropped back to pre-pandemic levels. LIDL & ALDI are struggling with their “staffed but supposedly more responsive” checkouts. Even younger generation (K12 equivalent) are forced to retain links with cash – often due to the transport contactless issues mentioned above. This is before we even get to the “cash economy” that continues to flourish given the boom in house renovation that started during lockdowns. Indeed it’s growing from what I see, given the ongoing contraction in the local economy and growth of “informal economy”.

      2. Terry Flynn

        Sorry! My longer comment was meant to be standalone, not directed at you!
        Though my experience in Sydney was interesting – so many places “skipped” chip and pin (certainly on credit cards), going straight from magnetic stripe to contactless (2009-15).

  5. Wukchumni

    First I look at the purse, dept:

    Women of means have $30k Birkin Bags, while there is no equivalent in men’s wallets, I suspect foul play.

      1. Wukchumni

        The flipside to $30k purses are antique mechanical Swiss watches (no quartz movements please, whadya think we are, plebeians?) and the more ‘apps’ the better.

        A spendy one might be $500k, and its one of the few props for a man of extreme means to let it be known that he keeps better time than everybody else, despite the fact that a Timex tells the exact same time.

        There is no equivalent in women’s watches…

        1. digi_owl

          Women has far more choices for adorning their wrists anyways.

          I have also seen some recent examples of overly expensive “designer” smartphones going round. But with the latest from Apple and Samsung easily hitting $1000+ i suspect everything is relative in that department.

  6. digi_owl

    Up in the (not so) frozen north there is a push to digitize everything as well.

    Made for a bit of a mess when banks suddenly had to ask people to show up in person at one of their remaining offices with identity papers because a new KYC law had come into force. Some images made one think of the soviet era queues the propagandists love to parade around any time capitalism is questioned.

    Never mind that recently the biggest digital ID and payment service was outsourced to an American company. Can’t say reliability has improved much since.

    For now i am playing the luddite and refuse to participate. Something that may catch people that know me off guard, as i used to be quite the nerd in my younger days. But frankly my main reason for avoiding all this is that they introduce massive single points of failure.

  7. ChrisPacific

    Wallets have been less important in New Zealand for decades now thanks to the EFTPOS system, which is an example of digital payments done well – it’s cheap to run, the transaction costs are tiny (and included in the monthly cost) and it works with debit cards from all banks. It also sits happily alongside cash payments without attempting to replace them.

    The banks and credit card companies don’t like it (to them it’s a missed opportunity for fee extraction) and have been trying to replace it for some time. They have a rival ‘Paywave’ service they are promoting, which is somewhat simpler and quicker to use, but less secure and has vastly higher fees. They are trying to drive adoption by pushing the fees onto retailers and hoping consumers will drive a shift (they also put on a show of concern about Covid, describing it as a ‘contactless’ alternative). There is no way I would trust Mastercard to build a digital payment system that wasn’t based on rent extraction.

    Note that regarding wallets, ‘less relevant’ does not mean ‘irrelevant.’ After the earthquake in Christchurch, for example, physical cash in wallets was suddenly essential.

    1. Wukchumni

      I was in Christchurch a few weeks before the 2nd earthquake hit and in Six Rivers when the deal went down.

      1. JBird4049

        Besides the West Coast being earthquake country and large parts of the country getting visits from hurricanes and tornadoes, there is also the reality that in much of the country the word isolated is an understatement. Let me restate that. If the physical infrastructure is falling down even without an assist from the quakes, floods, fires, hurricanes, tornadoes, blizzards, and who knows what is, just why so anyone insist on electronic payments, which does depend on the same infrastructure?

  8. Onward to Dystopia

    Considering my wallet for the last 5~ years has consisted of a rubber band (sometimes two in case one breaks) I would have to agree wallets are “shrinking.” I do carry a little folded cash, but I have to admit I rarely use it.

    I don’t have a credit card and never have, and I’ve been warned all my life how terrible that is for my credit rating or whatever, but considering I’ve made it halfway to the dirtnap and haven’t needed it yet I think I’ll hold out.

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