Housewares Business-to-business magazine for housewares retailers and their suppliers
As consumers feel the economic squeeze they are increasingly paying for purchases by cash – and significantly cutting costs for retailers in the process.
The British Retail Consortium’s latest annual Cost of Payment Collection survey, which covers 2011, found that at a time when many household budgets are under severe pressure, customers are using cash more often because it helps them manage their funds and prevents them spending money they have not got.
And, says the BRC, accepting payments by cash is, on average, 24 times cheaper for retailers than credit card payments.
In 2011 the average cost to a retailer of having a credit or charge card payment processed was 36.2p and for a debit card 9.6p, while a cash payment cost just 1.5p.
Cash was used in 5.7% more transactions in 2011, totalling 58.3% of all retail transactions and adding up to only 11.1% of retailers’ costs. However, credit and charge cards made up 11% of transactions but incurred 51.1% of costs.
The BRC says that despite the increased use of cash, unjustifiably high card charges to retailers still need to be addressed.
“Customers have less money. They’re buying things only as and when they need them, shopping more often but spending less each time, and they’re more likely to be paying with cash,” said director of business and regulation Tom Ironside.
“In 2010 financial worries were putting people off running up debt and they turned away from credit cards. Now times are even tougher and overall card use is down by 10.5% as people have switched to cash to better manage their spending.
“But retailers are not cheerleaders for cash. Retailers sell things. Paying is a necessary final stage. It should be easy for customers to do that in the ways they want to and the cost to retailers should fairly reflect the costs banks face in processing those payments.
“There can be no justification for such dramatic differences in charges,” he said. “They’re an unjustifiable tax on retailers and customers. And more efficient technology should result in charges going down, not up.”
