New figures from the British Retail Consortium (BRC) suggest cautious customers, increasingly reluctant to spend money they haven't got, are turning from credit cards to cash and debit cards to better manage their finances.
The findings show the proportion of transactions using credit cards fell by 12.9% in a year while the proportion involving debit cards rose by 15.8%. Cash was involved in a smaller proportion of transactions than a year earlier but used for a greater proportion of overall retail spending as the average amount spent in each cash transaction increased by 13% to £12.93.
Retailers are investing to cut the payment costs they can influence. Fraud losses fell by a huge 37% in 2010, compared with 2009 as retailers invested in technology such as the latest secure card readers, new levels of internet security and note checkers at tills.
But the costs retailers cannot control – the charges they have to pay to banks – remain illogical and unjustifiably high. In 2010 retailers taking part in the survey paid out a total of £659m in fees for payment processing and cash collection.
British Retail Consortium Director General Stephen Robertson said: “Hard-pressed customers are switching to cash and debit cards for the reassurance that they can’t spend what they haven’t got. At the same time, use of credit cards has dropped sharply. Cash remains king – used for more than half of all retail payments.”
He added: “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 survey includes results from over eight billion transactions in shops - large and small, multiples and independents - and online. Total UK retail spending in 2010 was £292bn. Transactions covered in this survey represent 60% of that spending.
The BRC’s full Cost of Payment Collection Survey is available from http://www.brc.org.uk/downloads/BRC_CoPC_Key_Findings_Report_2010_June_2011.pdf