Cash is still the favourite way to pay for today’s customers – but alternative methods are gaining in popularity, according to the British Retail Consortium’s (BRC) annual payments survey.
The study, which covers over 10 billion transactions made in shops and online in 2012, shows that while over half of transactions (54.4%) are paid in cash, its use has declined as a percentage both of number of transactions (down 6.7%) and money spent (down 9.7%). This is the first time in the survey’s 13 year history that both measures have seen a decline.
The report also 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 rapid growth of comparatively new ways to pay such as PayPal and online payments. They now account for 5% of all transactions.
The survey also shows banks continue to levy high charges on retailers for handling card payments. The average cost to a retailer of having a credit or charge card payment processed was 25 times higher than for cash (38p versus 1.5p). Credit and charge cards account for only 10.6% of transactions but over half (50.1%) of costs, and total costs associated with those cards were up by 7%, even though use is down on the previous year.
BRC Director General Helen Dickinson 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.
“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.”
She continued: “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.”