Cash in decline

Posted by Sam Twyford in Personal Finance on 5 June 2013 - Sam is a Product Manager at checkmyfile

A new survey released by the British Retail Consortium (BRC) has found that British shoppers did 10% less of their shopping with cash in 2012, compared with that of 2011.

With payment technology evolving all the time, customers are increasingly more prepared to embrace new ways of making purchases.

The BRC analysed over 10 billion payments made last year, and finds that cash is still the most popular form of payment, accounting for 54% of all transactions, down 6.7% on 2011. This is the first time in 13 years of the BRC’s annual survey that the use of cash has been seen to have declined.

Debit cards are increasingly popular, up by 3.4%, which accounts for 30% of all transactions, whereas the use of credit cards declined by 3.2%. Debit cards help people to manage their money better and acts as a much more convenient way to pay as an alternative to holding cash.

The use of alternative payment methods have more than doubled on the previous year. This has been driven by the increase in money-off vouchers, provided both in coupon form and via mobile phone apps. Certain apps such as Voucher Cloud provide specific discount codes for consumers locally that can be scanned and used in store. Online payments such as the use of PayPal now also account for 5% of all transactions.

Helen Dickinson of the British Retail Consortium says, “Cash is still the most popular way to pay, but our survey shows how rapidly alternative and emerging methods are gaining ground. These methods will be the ‘ones to watch' in the future, and retailers are investing heavily to make sure their customers have choice and convenience in ways to pay, whether in-store, at home or on the move.”

"Against a backdrop of greater retail efficiency and innovation, the one jarring note is that charges remain disproportionately high. They continue to rise even though credit card use has fallen. It beggars belief that retailers incur average charges of 38p per credit and charge card transaction, 25 times more than for cash.”

Sam Twyford is a Credit Analyst at Checkmyfile, has a degree in Business Studies and is an Associate of the Institute of Credit Management. He can be contacted at sam.twyford@checkmyfile.com

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