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UK consumer card spending overtakes cash

By Danielle Wightman-Stone

8 Oct 2019

Retail

Consumer card spending overtook cash spending in 2018, according to new research from the British Retail Consortium, with cash payments dropping to third place behind debit and credit card spending.

The Payment Survey reveals that debit cards remain the most popular method of payment, accounting for almost three-in-five transactions.

The use of cash payments has been falling steadily, however, the research reveals that over the past five years cash use has dropped from over half of all transactions in 2013 to under 40 percent in 2018.

Cash accounted for just 1 pound in every 5 pounds spent with UK shops, and the value of those cash transactions has also fallen from 28 percent to 20 percent during the same period.

Credit and charge cards accounted for 82 billion pounds, or 22 percent, of retail sales last year - outstripping cash, at 78 billion pounds, for the first time. Spending on debit cards totalled 216 billion pounds.

Increase in card use, also has an impact on retailers, as card costs continue to rise with retailers spending 1.3 billion pounds with third parties, up 70 million pounds from 2017. Each transaction cost retailers an average of 5.85 pence per transaction, up 17 percent, from 4.98 pence.

These additional costs are largely driven by the fees paid by businesses to credit and debit card companies, that increased by over 50 percent in 2018. The BRC is calling for action to improve regulation of card payment fees, expanding and simplifying the regulation to cover the full range of transactions and prevent abuse by card companies.

Andrew Cregan, policy advisor payments and consumer credit, said in a statement: “With card payments accounting for almost 80 percent of retail sales, it is vital that the Government takes action to tackle the soaring costs that card companies charge retailers. Without action we will see businesses put under further pressure and it will be consumers who are forced to pay the price.”

This trend in the rise of card payments is not just seen in the UK but across Europe and North America, as more people relying heavily on their cards, mobiles, and contactless devices to pay. Research from People’s Currency Exchange, WeSwap has revealed that Sweden Norway and Finland are top of the list for card use, based on the popularity of use across its 500,000-strong userbase.

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