Cash use down by 10% in 2012
The British Retail Consortium's Cost of Payment Collection Survey found that although paying with cash is still the most popular choice for UK consumers with 54.4% transactions paid by this method, the number of cash transactions declined by 6.7% in 2012 while the amount of money spent in cash down 9.7%. This is the first time in the survey's 13 year history that both measures saw a decline.
The survey, which covers nearly 10 billion retail payments in 2012, reveals that credit and charge card use was down by 3.4% as a percentage of transactions. In contrast, transactions made on debit cards were up by 3.2%.
Use of alternative payment methods more than doubled on the previous year, driven by manufacturers' money-off coupons and the growth of comparatively new ways to pay such as PayPal and online payments. These now account for 5% of all transactions.
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The survey also shows that banks continue to levy what the BRC says are unjustifiably high charges on retailers for handling card payments. The average cost to a retailer of having a credit or charge card payment processed was found to be 25 times higher than for cash. Credit and charge cards accounted for only 10.6% of transactions but over 50% of costs. In addition, total costs associated with those cards were up by 7%, even though use was down on the previous year.
Helen Dickinson, BRC director general, said: "New ways to pay and new ways to shop are shaping the retail landscape like never before. Changing customer preferences are driving the increase in debit card use – they're helping people to manage their money better and are a natural fit for online shopping and self-service checkouts".
Helen continued, "Cash is still the most popular way to pay, but our survey shows how rapidly alternative and emerging methods are gaining ground, with growth more than doubling on the previous year, albeit from a low base. These methods will be the ‘ones to watch' in the future, and retailers are investing heavily to make sure their customers have choice and convenience in ways to pay, whether in-store, at home or on the move.
"Against a backdrop of greater retail efficiency and innovation, the one jarring note is that charges remain disproportionately high. They continue to rise even though credit card use has fallen. It beggars belief that retailers incur average charges of 38p per credit and charge card transaction, 25 times more than for cash.
"Retailers have been arguing this in court for more than a decade now, and a resolution to the case is long overdue. The right conclusion would reduce these excessive costs for retailers and support their ability to invest and innovate."
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