British consumers used cash 10 percent less in 2012 while debit cards and alternative payment methods continue to grow in popularity, according to a survey from the British Retail Consortium.
The BRC maintained that over half of all transactions (54.4 percent) are still paid in cash, but cash’s use in both the number of transactions and the value of the transactions declined 6.7 percent and 9.7 percent, respectively. It was the first time both categories declined in the same year in the survey’s 13-year history. Cash, however, was not the only payment method to decline. Britons’ credit card use declined 3.4 percent while debit cards rose 3.2 percent.
Alternative payments also were seen as winners of 2012 as payments through PayPal and other online payment gateways accounted for 5 percent of all transactions.
Helen Dickinson, Director General of the British Retail Consortium remarked on the findings, “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.”
The BRC survey also focused on the cost for merchants to accept payments.
The average cost to a retailer to process a credit card was 25 times higher than for cash handling, the survey said. Dickinson commented:
“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 ($.58) per credit and charge card transaction, 25 times more than for cash.”
The BRC’s report reinforces that consumers in the United Kingdom are increasingly comfortable with modern payment instruments, including contactless as seen by the potential decision to end cash payments for all bus fares in London later this year. As for the cost of accepting payments, though new market solutions like PayPal’s new card reader are offering more affordable payment acceptance options for merchants, this issue is likely not to disappear any time soon.
Click here to access the report.