Last year 59 per cent of the 37 billion transactions were done with cash, a sharp decline from the 73 per cent of transactions that were made with cash just 10 years ago.
According to the Payments Council, a trade body representing the banks, card and cash machine industry, this proportion will fall to below 50 per cent by 2015, and to 45 per cent by 2018.
The figures have alarmed some campaigners, who gave warning that banks should not encourage the march towards a cashless society.