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Cards overtake cash

News, 13 July 2017
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LONDON: Cards accounted for more than half of all retail transactions by volume in the UK last year, while debit card purchases have overtaken cash for the first time, according to a new survey.

The latest annual Payments Survey from the British Retail Consortium (BRC), the trade association for UK retailers, was based on a sample from 50% of the entire retail industry.

It found that cards have become the dominant payment method as retailers' investment in payment technology has facilitated greater customer choice over how they pay for their goods – both in store and online.

Debit cards were used for 8.1bn transactions worth £189.6bn, while credit and charge cards added a further 2.2bn transactions worth £71.9bn. Cash was used in 8.1bn transactions worth £81.5bn.

The volume share of debit card transactions was up 4.5% and these accounted for 42.6% of all retail transactions; the share of cash transactions shrank 4.5% to account for 42.3%; credit and charge cards made up the remaining 11.4%.

The use of contactless payments has been a major factor in this shift as customers avail themselves of the convenience and, ten years after the technology was first introduced, start to use their cards habitually for ever smaller purchases; average transaction value on cards has declined from £30.53 in 2013 to £25.40 in 2016.

The trend will continue as more store checkout facilities are converted to accept not just contactless card payments but also mobile wallet payments.

According to the BRC, 68% of manned store terminals were able to accept contactless cards in 2016 (up from 47% in 2015), while 60% of self-service checkouts could do so.

The survey further noted that retailers are investing heavily in software and hardware to accept other new payment applications, such as ApplePay, AndroidPay and SamsungPay – mobile wallets that are not limited to the current £30 limit imposed on contactless cards.

Andrew Cregan, BRC Policy Advisor - Payments and Consumer Credit, added a European angle, observing that investment in these new applications had been facilitated by the EU Interchange Fee Regulation (IFR), which caps some of the fees for handling credit and debit card transactions.

"Government should act to retain the benefits of the IFR for retailers and their customers after the UK leaves the EU and introduce further regulatory action to address the alarming increase in other card fees and charges at a time when the retail industry is facing acute cost pressures elsewhere," he said.

Data sourced from BRC; additional content by WARC staff

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