UK: Cash use down by 10% in 2012 – report

Cash is still the most popular payment method for customers in the UK but the pace of change in the ways people are choosing to purchase products and services is accelerating, the same source indicates.

In terms of payment methods, the major gainers have been debit cards, as well as newer methods such as PayPal, as online and self-service shopping grows. Increasingly people also prefer debit to credit cards as they try to manage their under-pressure finances – leaving cash and credit cards the big losers.

According to the same source, while 54.4% are paid in cash, its use has declined as a percentage both of number of transactions (down by 6.7%) and money spent (down by 9.7%).

The survey, which covers nearly 10 billion retail payments in 2012, reveals credit and charge card use was down by 3.4% as a percentage of transactions. In contrast, transactions made on debit cards were up by 3.2%.

The use of alternative payment methods more than doubled on the previous year, driven by manufacturers money-off coupons and the rapid growth of comparatively new ways to pay such as PayPal and online payments. They now account for 5% of all transactions.

The survey also shows banks continue to levy unjustifiably high charges on retailers for handling card payments. The average cost to a retailer of having a credit or charge card payment processed was 25 times higher than for cash (38p versus 1.5p). Credit and charge cards account for only 10.6 per cent of transactions but over half (50.1 per cent) of costs, and total costs associated with those cards were up by 7 per cent, even though use is down on the previous year.