My son is seven. Last week, he was playing shopkeeper with his cousin on our living room floor. There were toy coins scattered about, crumpled paper notes, even a little wooden cash register. But when it came time to 'pay' for his plastic groceries, he didn't reach for any of it.

Instead, he grabbed my iPhone from the sofa and tapped it to her card machine.

"Apple Pay," he said. Matter of fact. Transaction complete.

It wasn't a demonstration of tech-savviness. There was no showing off. To him, this was simply how you pay. The coins and notes? Props. Artefacts from a world he doesn't quite recognise as real.

That moment stuck with me longer than it probably should have. Because here's the question it forced: by the time my son is old enough to open a bank account, will cash even exist in any meaningful way?

We spend a lot of time in the payments industry talking about adoption curves and market share. But what we don't discuss enough is the concept of default behaviour. What feels natural, instinctive, unremarkable.

For my generation, cash was the default. You budgeted with it. You felt it leave your wallet. Cards were for big purchases or emergencies. For my son's generation, tapping a phone or watch isn't just convenient. It's the baseline expectation. Cash is the exception. The novelty.

The numbers bear this out in ways that should make anyone in financial services pay attention. In the UK, cash now accounts for just 9% of all payments, down from 48% a decade ago. In 2024, for the first time, more than half of British adults were regularly using mobile wallets. Meanwhile, 30% of UK adults are living what UK Finance calls "largely cashless lives," using cash once a month or less.

The US has been slower, but the direction is identical. The Federal Reserve's 2025 Diary of Consumer Payment Choice shows cash now represents 14% of consumer payments, down from 31% in 2016. Credit and debit cards dominate, but here's the generational fault line: adults under 55 use cash for just 12% of transactions, compared to 22% for those over 55. Among 18-to-24-year-olds, 45% of all payments are made via mobile phone.

This isn't adoption. It's replacement.

If there's a single event that accelerated this shift by years, perhaps a decade, it was the pandemic. We all knew it was happening in real time. What we may not have fully grasped is that cash usage never recovered.

In early 2020, the conversation around contactless payments shifted overnight. Hygiene concerns made handling notes and coins feel suddenly antiquated, even risky. Retailers actively discouraged cash. Banks and card networks raised contactless limits. And millions of consumers who had never used Apple Pay or Google Pay were suddenly tapping their phones at Tesco.

The BIS reported that contactless payments grew at their highest rate since records began in 2020, while ATM withdrawals dropped by over 20% in value across most developed economies. Central banks noted a peculiar phenomenon: currency in circulation surged as people hoarded cash for security, while actually spending it fell off a cliff.

Here's what matters: when restrictions lifted, behaviours didn't revert. An ECB survey found 87% of consumers who reduced cash usage during the pandemic said they intended to continue doing so permanently. McKinsey's research shows nearly nine in ten Americans now use some form of digital payment. The pandemic didn't create new preferences. It revealed latent ones and removed the friction that had prevented their expression.

It would be easy at this point to declare cash dead. But that would be both premature and somewhat naive.

Cash serves functions that digital payments simply cannot replicate. Not yet, anyway. It offers privacy. It works when networks fail. It doesn't require a bank account, a smartphone, or any form of digital identity. For the 1.2 million Brits who still use cash for most transactions, and for the low-income households in both the UK and US who rely on it disproportionately, cash isn't preference. It's necessity.

Federal Reserve data shows that households earning under $25,000 use cash for 24% of their payments, compared to just 9% for those earning over $150,000. There's a social inclusion argument here that the industry would do well not to ignore. And regulators certainly won't.

But the trajectory is clear. UK Finance projects cash will account for just 4% of payments by 2034. That's not extinction. It's marginalisation. Cash will become what cheques became: technically available, rarely used, and increasingly awkward when you encounter someone who still relies on them.

The Fed has started referring to a "floor" in cash usage, suggesting we may be approaching a baseline below which cash won't meaningfully fall. But floors have a way of lowering over generations. My son doesn't see a floor. He sees a relic.

Looking five to ten years ahead, several converging forces will reshape payments in ways that make today's landscape look almost quaint:

Digital wallets become the centre of financial life. More than 5 billion people globally now use digital wallets, with projections suggesting over 50% of all e-commerce and 32% of point-of-sale transactions are already flowing through them. By 2030, wallets may hold not just payment credentials but identity documents, health records, and loyalty programmes. The wallet becomes the interface for the financial self.

Embedded finance makes payments invisible. The most successful payment is one you don't notice. Embedded finance, where payment capabilities are built directly into non-financial apps and platforms, will continue expanding. When my son's generation hails a ride, orders food, or subscribes to anything, they won't "make a payment." It will simply happen. Mastercard estimates the small business embedded finance market alone will reach $124 billion by 2025.

Biometric authentication replaces plastic. Juniper Research projects in-store biometric payment transactions will reach $1.2 trillion globally by 2028. Passkeys are gaining traction, allowing consumers to authenticate with fingerprints or facial recognition rather than PINs or passwords. The card in your pocket may become redundant. Your face becomes your credential.

Identity becomes the new payment rail. This is perhaps the most profound shift. As digital identity infrastructure matures, the distinction between "proving who you are" and "authorising a payment" will blur. Mastercard is already piloting services that verify consumer eligibility for purchases through payment cards alone, no document uploads required. Digital identity wallets could unify authentication across financial, government, and commercial services.

Real-time payments go mainstream. Account-to-account payments, powered by schemes like FedNow in the US and expanding SEPA instant transfers in Europe, will offer alternatives to card rails. For merchants facing interchange pressure and consumers seeking instant settlement, the appeal is obvious. Whether this displaces cards or simply adds another option remains to be seen, but optionality is expanding rapidly.

None of this happens in isolation. The shift away from cash and toward digital, embedded, invisible payments carries real consequences for every participant in the ecosystem.

For consumers, convenience has never been higher. But neither has the potential for financial surveillance. When every transaction is logged, analysed, and potentially monetised, the privacy that cash provided disappears. Control over spending becomes easier in some ways (real-time notifications, spending limits), harder in others (frictionless payments make overspending effortless).

For merchants, the trade-offs are complex. Digital payments mean faster settlement, richer data, and reduced cash-handling costs. But they also mean interchange fees, terminal costs, and dependency on third-party infrastructure. When systems go down, cashless businesses go dark.

For banks and fintechs, the competitive landscape is fragmenting. Digital wallets sit between banks and customers, capturing data and loyalty. Embedded finance lets non-banks offer financial services without becoming banks. Infrastructure providers (payment networks, processors, core banking platforms) may capture more value than the institutions they serve.

For regulators, the agenda is full. Financial inclusion demands that alternatives to digital remain viable. System resilience requires that payment infrastructure doesn't become a single point of failure. And as payments become more concentrated among fewer platforms, questions of market power and systemic risk will only intensify.

I learned to count change as a child. I learned that coins have different weights and edges, that notes have security threads, that you hand over more than you owe and get something back. These were practical skills.

My son won't need any of this. By the time he's managing his own money, the infrastructure he interacts with will likely feel as different from today's as today's feels from the chequebook era. The tap of my phone to her card machine that closed his imaginary transaction isn't pretend anymore. It's prophecy.

The payments industry often asks whether consumers are "ready" for new technologies. Perhaps the better question is whether the industry is ready for consumers who've never known anything else.

Because for my son, there's nothing to adopt. This is simply how money works.

Related reading from Major Matters:

Sources

UK Finance, UK Payment Markets 2025 and UK Cash and Cash Machines 2025

Federal Reserve Financial Services, Diary of Consumer Payment Choice 2025

Bank for International Settlements, Covid-19 accelerated the digitalisation of payments (December 2021)

European Central Bank, Consumer payment behaviour surveys (2020-2021)

McKinsey & Company, Digital Payments Consumer Survey 2024

Juniper Research, Biometric Payments Market Forecast (2028 projections)

Mastercard, Embedded Finance Market Analysis (2025)