A lobbying group has warned a 'cashless society' could spell trouble for the region's small businesses, as new figures show the number of payments made by debit card in the UK overtook those made by cash for the first time in 2017.

According to UK Finance, there were 13.2 billion debit card payments last year, outstripping the 13.1 billion payments made in cash.

Its UK Payment Markets report said around 3.4 million people hardly used cash at all last year – but that it is still the second most frequently used payment method.

The Federation of Small Businesses (FSB) has warned the growing dominance of card payments could hurt smaller firms who have had to grapple with the costs of processing them.

FSB East Anglia area lead David Howell said small firms were increasingly finding themselves 'between a rock and a hard place' with customer payments.

Legislation implemented in January has banned companies from imposing surcharges for credit or debit card payments – removing what Mr Howell called the 'freedom to share the burden' of card payment fees.

He said: 'The interchange fees demanded by card companies are only the start of the costs that small firms incur when they process a card payment. They also have to foot the bill for compliance, set-up, authorisation fees and payment system operating costs.

'This has made insisting on cash payments all the more appealing, but customers' access to cash has been increasingly restricted by a rapidly diminishing bank branch network and threats to ATM funding.'

A survey by card payment solutions firm Paymentsense found card transactions are the favourite form of payment for 80% of people in the UK.

John Mills, director of till systems designer and retailer PanaEpos at Scottow Enterprise Park, said cashless payments could be beneficial for businesses. 'The more cashless payments you have the less opportunity there is for fraud. If it is done on a card it is a more secure transaction.'

Visa demonstrated the potential fragility of a cashless payments system after an outage in its service caused problems across Europe, for businesses to which it supplies payments systems as well as customers.

But Mr Mills said such incidents were uncommon. 'It is a big inconvenience but there is always another way to pay,' he said.