The number of cash payments made in the UK fell by 35% during 2020, according to the latest figures from banking trade body UK Finance.
However, cash remains the second most frequently used payment method behind debit cards, accounting for 17% of all payments.
During 2020 the number of contactless payments made in the UK increased by 12% to 9.6 billion payments. In the last four years contactless payments have jumped from being just 7% of all payments to 27%.
The total number of payments in the UK declined last year, falling by 11% to 35.6 billion transactions. It was the first decline in six years as the COVID-19 pandemic slowed down the economy.
David Postings, Chief Executive of UK Finance, said: 'The pandemic resulted in some marked changes in payments behaviour and while it's too early to say whether they are permanent changes, we did see an acceleration in some existing trends such as the reduction in cash usage and the growth in contactless and mobile payments.
'The increase in the contactless limit to £45 coupled with retailers encouraging its use meant that more than a quarter of all payments in 2020 were made via contactless. The use of cash fell, reflecting the fact that large parts of the economy were closed during the year, although it still remained the second most popular payment method behind debit cards.'