Cash is still king, but e-payments growing - Business Works
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Cash is still king, but e-payments growing

by Helen Dickinson, Director General, British Retail Consortium Customers are taking advantages of new ways to shop and pay. New data reveals that a growing proportion of smaller payments previously made in cash are now being made in other ways. The availability of contactless cards, handy express stores and self-service tills, as well as online sales, have contributed to the increased use of debit cards to 50% of retail sales value in 2013, up by 11% over the last five years. Over the same time period, there has been a decline in the average debit card transaction value and in the use of cash by 14%. This is very much in line with the attention customers have paid to price and value during the recent economic uncertainty as they have sought to minimise payments from their budgets for everyday items, says Helen Dickinson, Director General of the British Retail Consortium.

Debit cards now account for 32% of the number of transactions compared to 30% last year. As everyday use of digital technology increases, customers are becoming accustomed to using the latest developments in ways to pay. However, cash remains the dominant method of payment, with 53% of transactions still made in cash, although this has declined by 3% over the last year and 10% over the last 5 years.

Our Payments Survey 2013 [PDF] covers 60% (or £191 billion) in retail sales in 2013. It tells a different story for credit cards as customers are spending the same amount in total, but for fewer items, suggesting more considered purchasing. During 2013 the share in transaction volumes fell by 13% (from 11% to 9% per cent). The average transaction value was up by 12% on last year. This reverses a decline in average transaction values over the previous three years.

banks are still levying unjustifiably high charges

The survey shows that banks are still levying unjustifiably high charges on retailers handing card payments. The average cost to a retailer to process a credit or charge card payment is now 40.9 pence, up 18.3% in the last five years. 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 is now 1.3 pence and has decreased 38% in the last five years. Cash accounts for 53% of transactions, but 9% of costs. Debit cards costs have increased by 4% in the last five years and cost 8.8 pence per transaction. They account for 32% of transactions, but 37% of costs.

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.

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.

For more information about the British Retail Consortium, please visit:

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