UK customers spend less cash than ever as digital payments rise
Consumers are turning away from cash to use other means of payment, data shows.
Cash has been the principal method of payment in the UK for centuries, but the advent of new technologies means that this is slowly changing.
According to figures published yesterday by the British Retail Consortium (BRC), shoppers in the UK are actually using less cash than ever before as they turn to alternative payment methods. In fact, the proportion of sales transactions conducted in cash declined by 3.3 per cent last year compared to 2012. As a percentage of total sales turnover, cash transactions slipped by 4.5 per cent.
That may not sound huge, but it means that over the past five years the amount of revenue coming from cash transactions has fallen by a significant 14 per cent. The average transaction value has slumped by 17 per cent over the same period, so that last year the typical cash transaction totalled £9.47.
BRC says the figures indicate that debit cards are increasingly becoming the payment method of choice for lower-value transactions that would previously have been made with notes and coins. The average debit card spend is falling as cash use declines. In part, this is down to the introduction of contactless cards and self-service checkouts, as well as smaller express convenience stores and, of course, online sales.
“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, BRC director general.
As a result, half the total value of retail transactions in 2013 was purchased by debit card, though they still only constitute 32 per cent of all transactions. Credit cards, however, saw roughly the same level of spending while the number of transactions declined. That indicates that people are using credit cards for smaller numbers of high-value transactions – which BRC says suggests “more considered purchasing”.
Even so, it’s far too early to suggest that we could be seeing the end of the cash transaction. Especially for very small payments, cash is still king, accounting for more than half of all transactions last year. What’s more, considering the very low transaction costs of around 1.29 pence per sale, or 0.14 per cent, it is likely retailers will continue to look on cash with favour. Card payments come with disproportionately high handling costs.
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