According to data from the British Retail Consortium (BRC) cash was used for almost one in five purchases at 19.9% of transactions in 2023, up from 18.8% in 2022.
Debit cards remained far and away the most common method of payment, increasing to 62.0% of transactions (66.7% by spending). Taken together with credit cards, card payments accounted for over 75% of transactions and 85% of spending.
Overall, customers visited shops more frequently but made smaller purchases, as the cost of living crisis continued to pinch in 2023. The total number of transactions rose from 19.6 billion to 21.0 billion while the average amount spent per transaction fell from £22.43 to £22.03.
Cash remains a vital form of payment for a sizeable minority of the population, particularly for its role in budgeting. This has made it important to many households during the recent cost of living squeeze.
But with card payments continuing to dominate, the BRC is calling for reforms in the market as the total amount paid by retailers to banks and card schemes rose by over 25% in 2023, at an extra cost of £380 million. This brought the total card fees paid to £1.64 billion.
Chris Owen, BRC payments policy advisor, says: “Card fees continue to rise at a substantial rate and the Payment Systems Regulator (PSR) must act upon the harms it has identified in its current market reviews. It must move swiftly to reform the market and implement remedies including price caps on fees and price rebalancing measures.”
He says the BRC wants to see ‘meaningful’ reforms coming from the PSR’s review into card fees and the initiation of a commercial cards market review.
The BRC is also advocating for wider uptake of open banking payments.
“We want to see the growth of Open Banking in the UK, without replicating the harms in the existing card system,” the lobby group says. “Open Banking should be a viable alternative to cards both online and at point of sale, at a fairer price to retailers.”
