Shoppers’ cash use falls to lowest level on record
New figures have shown that shoppers are using less cash than ever as retailers introduce new ways to shop and pay.
The data released by the British Retail Consortium in its Payments Survey 2013 reveals that a growing proportion of smaller payments previously made in cash are now being made in other ways such as contactless cards and debit cards.
The BRC said the availability of contactless cards, express stores and self-service tills as well as online sales, contributed to the use of debit cards increasing to 50% of retail sales value in 2013. This represents a rise of 11% over the last five years. During the same time period there has been a decline in the average debit card transaction value, and in the use of cash by 14%.
Debit cards now account for 32% of the number of transactions compared to 30% last year. However, cash is still the dominant method of payment with 53% of transactions still being made in cash, although this has fallen by 3% over the last year and by 10% over the last five years.
Never Miss a Retail Update!The survey, which covers 60% or £191 billion in retail sales in 2013, tells a different story for credit cards however. The data shows that shoppers are spending the same amount in total on credit cards but are paying for fewer items with the cards. During 2013, the share in transaction volumes fell by 13% although the average transaction value was up by 12% on last year. This reverses a decline in average transaction values over the previous three years.
BRC director general Helen Dickinson said: “The recent pattern of spending on larger but fewer products on credit cards shows that customers are now feeling more confident than they did a year ago and reflects the wider consumer outlook of cautious growth.
“Cash use down 14% in the last 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.”
The survey also shows that banks are levying what the BRC says are unjustifiably high charges on retailers handling card payments. The average cost to a retailer to process a credit or charge card payment has risen by 18.3% in the last five years to 40.9 pence. The BRC found that credit and charge cards account for only 9% of transactions but almost half (48.7%) of costs.
At the same time, the cost to process a cash payment has declined by 38% in the last five years to 1.3 pence. Cash accounts for 53% of transactions but 9% of costs. Meanwhile debit cards costs have increased by 4% over the same period to 8.8 pence per transaction. They account for 32% of transactions and 37% of costs.
Dickinson continued: “It is really disappointing that the average cost of accepting both credit and debit cards have increased over five years, while cash costs have gone down. Interchange fees cost the retail industry and its customers almost £1 billion in 2013. The much-welcomed European proposals to cap how much banks can charge retailers to process card payments are close to final approval, but in the meantime, we continue to work with the UK Government and Payment System regulator to implement caps on UK fees without further delay, as has happened in other European countries.”
