Consumers turn to cash and debit cards to keep spending under control
New figures from the British Retail Consortium published today have suggested that as consumers continue to be cautious in their spending, they are also increasingly using cash and debit cards to help keep their finances under control.
The findings show the proportion of transactions using credit cards fell by 12.9% in a year while the proportion involving debit cards rose by 15.8%.
Cash was used in a smaller proportion of transactions than a year earlier but used for a greater proportion of overall retail spending as the average amount spent in each cash transaction increased by 13% to £12.93.
Cash was also the quickest way to pay taking an average 27.2 seconds compared with an average 39.4 seconds for a card payment.
The BRC’s annual Cost of Payment Collection Survey tracked nearly eight billion transactions in store and online, adding up to 60% of total UK retail sales, the largest proportion of UK retailing the survey has covered since it began in 1999 said BRC.
This year’s results compared 2010 with 2009 and examined the methods of payment customers were using, costs imposed on retailers by banks for processing those payments and losses to card and cash fraud.
The research found that fraud losses fell by a massive 37% as retailers invested in anti-fraud technology such as the latest secure card readers, new levels of internet security and note checkers at tills.
However the BRC said the charges that retailers pay to banks remained “illogical and unjustifiably high” with retailers paying a total of £659 million in fees in 2010 for payment processing and cash collection.
On average in 2010, each retailer paid 1.7 pence per cash transaction to have the money transported and banked. Despite the efficiency of electronic systems, the average charge for processing a credit card payment was 37.1 pence compared with a debit card average of 9.2 pence, BRC said
Cash was used in 55% of transactions but made up 11.5% of retailers’ payment costs. Credit cards were used in only 10% of transactions but accounted for 44.5% of retailers’ costs. Debit cards were used in 34% of transactions and made up 37.5% of retailers’ costs.
British Retail Consortium Director General Stephen Robertson said: “Hard-pressed customers are switching to cash and debit cards for the reassurance that they can’t spend what they haven’t got. At the same time, use of credit cards has dropped sharply. Cash remains king – used for more than half of all retail payments.
“In the face of big pressures on household budgets, people are managing their money carefully while retailers are minimising the costs they can influence by investing in anti-fraud technology.
“But unjustifiably-high payment charges are still being taken from retailers. The question is should this money be going into increasing banks’ profits or to keeping shop prices down for customers? Reducing the charges banks impose so they genuinely reflect the actual costs involved in processing these transactions is the right answer.”
