Consumers are increasingly paying in cash as shoppers find their household budgets being squeezed. The British Retail Consortium (BRC) annual payments survey for 2011 found that paying with cash is more common than a year ago. The survey also found that on average accepting cash payments is 24 times cheaper for retailers than credit-card payments.
The BRC findings show consumers are using cash more often because it helps them manage their money and prevents them spending money they do not have. It also shows that they are shopping more often but spending less each time.
Cash was used in 5.7 per cent more transactions in 2011, accounting for 58 per cent of all transactions. But the cost of the average shopping basket fell to £10.45 in 2011 from £12.93 in 2010.
The figures are from the BRC’s latest annual cost of payment collection survey which covers 2011 and includes results from around 9.4 billion transactions of all types. They add up to 59 per cent of total UK retail sales.
The survey also shows banks continue to levy high charges on retailers, and therefore customers, for handling card payments. The average cost to a retailer of having a credit or charge card payment processed was 36.2p while for a debit card it was 9.6p. But the cost of having cash transported and banked averaged just 1.5p, down from 1.7p the previous year as retailers invest to achieve greater efficiency.
The BRC survey also found cash remains the quickest way to pay taking an average 27 seconds, compared with an average 36 seconds for a card payment.
Tom Ironside, BRC director of business and regulation said: “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.
“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 per cent 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. They’re an unjustifiable tax on retailers and customers. And more efficient technology should result in charges going down not up.”
The survey includes results from over 9.4 billion transactions in shops - large and small, multiples and independents - and online. Total UK retail spending in 2011 was £303 billion. Transactions covered in the BRC survey represent £178 billion of that spending.
