Use of cash has fallen by 14% over the past five years as consumers turn to debit cards and the internet to make payments instead.
According to the British Retail Consortium’s (BRC’s) Payments Survey 2013, debit cards were used to cover 50% of the value of UK retail sales in 2013, up 11% over the past five years. Debit cards now account for 32% of transactions by number, compared with 30% last year. But, at the same time, there has been a decline in the average debit card transaction value.
Nevertheless, cash still remains the dominant method of payment since 53% of transactions are still made in cash.
Meanwhile, customers are still spending the same amount on their credit cards, but for few items, suggesting more considered purchasing, the BRC said. During 2013, credit cards’ share in transaction volumes fell by 13% (from 11% to 9%). But the average transaction value was up by 12% on last year. This reverses a decline in average transaction values over the previous three years.
The average cost to a retailer to process a credit or charge card payment is now 40.9 pence, up 18.3% in the past five years. Credit and charge cards account for just 9% of transactions, but almost half (48.7%) of costs.
On the other hand, the cost of processing a cash payment is now 1.3 pence and this has decreased by 38% per cent in the past five years. Cash accounts for 53% of transactions, but 9% of costs. In comparison, debit cards account for 32% of transactions, but 37% of costs.
Commenting on the findings, Helen Dickinson, director general of the British Retail Consortium, said: “Cash use down 14% in the past five years is a milestone in the development of our digital economy. It shows that customers are embracing digital shopping, whether online or on the high street, and retailers are adapting and evolving to meet the demand with excellent services. However, it is important to note that cash still remains dominant in the overall number of transactions.”
She added: “It is really disappointing that the average cost of accepting both credit and debit cards has increased over five years, while cash costs have gone down.”
Sally Percy is editor of The Treasurer