I have written before about why I believe growth in mobile payment use in the UK is likely to be slow, especially those based on near field communication technologies.

There is another reason for this. The economic downturn.

When people feel their jobs are secure, they have plenty of disposable income, credit is easy and the future looks bright, people are quite willing to use their cards to buy things. Why? Because they don’t feel the need to add up their expenditure and make sure they keep within a tight budget. If you’ve ever tried keeping a running total of spending on debit or credit cards, you’ll know how tricky it is.

But in an economic downturn, you would expect people to prefer cash over cards. You know when your cash is running down and when you don’t have any left. It’s not surprising then that the value of cash used by people in the UK last year rose by 4%, to reach £121 billion of UK retail sales, according to the Retail Gazette. And data from Touchpoints 2012 shows that 48% of people like to pay for cash for everything they buy, which is only two percentage points lower than in 2008 at the height of the economic crisis.

Given tight budgets are going to continue, even into the next parliament, this doesn’t bode well for technology companies and banks who would like to see mobile payments pick up. A cash transaction costs a retailer about two pence to process, whilst a debit card transaction costs about ten pence and a credit card over thirty pence, with the banks pocketing most of the proceeds.