Consumers favour debit over credit card usage

Figures from the latest Cost of Payment Collection Survey by the British Retail Consortium reveal that customers are favouring debit cards over credit cards when making payments.The proportion of transactions using credit

cards fell by 12.9% up to 2010 as shoppers made a bid to better manage their finances. Director General of the BRC Stephen Robertson said that “cash remains king”, as it is used for more than half of all retail payments, although the overall proportion of cash purchases fell year-on-year.

However cash payments look set to decrease as according to figures published by the Payments Council, the cumulative total spent on debit cards outweighed cash payments in the latter half of 2010 for the first time ever.

Whilst the development of contactless payment technology and customers growing favour towards m-commerce should see the move of UK retail towards a cashless society, for now cash payments still remain the most popular method for buying products.

Robertson commented: “Hard-pressed customers are switching to cash and debit cards for the reassurance that they can’t spend what they haven’t got.

“In the face of big pressures on household budgets, people are managing their money carefully while retailers are minimising the costs they can influence by investing in anti-fraud technology.”

The BRC argues, however, that banks are charging too much for processing payments, especially given that businesses have invested heavily in efficient electronic systems. It found that retailers taking part in the survey paid out a total of £659 million in fees for payment processing and cash collection, with each business paying out an average of 1.7p per cash transaction to have the money transported and banked.

“Unjustifiably-high payment charges are still being taken from retailers,” Robertson said.