Card payments soared to 90 percent of retail payments in 2021

The pandemic changed the way consumers pay, with card use accounting for 90 percent of all retail payments in 2021, as the public was advised to use contactless payments.

The British Retail Consortium’s (BRC) latest annual Payments Survey reveals that cash usage fell to just 15 percent of all transactions in 2021, down from 30 percent in 2020. While 82 percent were made on credit or debit cards, up from 67 percent in 2020, and 3 percent of all transactions were made up of “alternative payments,” such as buy now pay later (BNPL) and gift cards.

More than four-in-five card transactions were made using debit cards, with the rest made up of credit and charge cards.

As a proportion of total money spent, cash accounted for just 8 percent of consumer spend, down from 15 percent, while credit cards rose slightly to 23 percent, and debit cards rose significantly to 67 percent, up from 59 percent in 2020.

While card usage soared, so did the costs associated with accepting payments, added the BRC, as retailers incurred costs of 1.3 billion pounds just to accept card payments from customers in 2021.

Debit cards, which accounted for most transactions, saw scheme fees rise by 28 percent compared to 2020, and total Merchant Service charges increased by 12 percent. That resulted in an additional 141 million pounds in costs imposed by card firms onto retailers just to process debit card transactions.

With the cost-of-living crisis continuing, the BRC, along with other business groups, are calling for intervention on anti-competitive practices in card payments to protect British businesses. It recommends that card fees should be stopped while the Payments Systems Regulator undergoes its lengthy market reviews into card fees. The BRC is stating that card companies “must enact temporary interventions to stop card fees rising during this period”.

It is also calling to remove interchanged fees. In 2020, the UK Supreme Court ruled that card firm interchange fees were unlawful, but these are yet to be abolished. In addition, it is asking the Treasury to conduct its own review into the cost of accepting cards.

Hannah Regan, payments policy advisor at the British Retail Consortium, said in a statement: “With the public in and out of lockdown and cash usage discouraged last year, over 90 percent of retail spending used debit or credit card.

“With card usage soaring, already hard-pressed retailers had to pay huge sums to accept these payments. We need urgent intervention from the Payments Systems Regulator and the Treasury to stop card schemes from abusing their dominant market position.”