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BRC report underlines rise of debit card and decline of cash

Cash was used for less than half of all retail transactions across the UK in 2015, according to the British Retail Consortium's (BRC) annual Payments Survey, published this week.

Underlining some of the trends revealed in other recent reports on the payments landscape, such as those from the UK Cards Association, the report highlights how debit and credit card payments are eating into cash's position as the number one transaction method of choice among consumers.

The BRC's research looked at the methods of payment UK shoppers are using when buying goods in store and online, how this differs from previous years and the average cost to the retailer for handling each method of payment. It found that the use of cash has fallen almost five percentage points – down to 47.15% of all retail transactions in 2015 from 52.09% the previous year.

According to the BRC, this is the largest percentage point drop for five years and means that almost 20% fewer transactions are made with cash than in 2011. Debit cards now account for 38.07% of transactions in the UK, and 53.42% in terms of overall value of retail sales.

Tom Ironside, director of business and regulation at the BRC, said: "Though the use of cash has been in decline for some time now, this year it has seen a significant dip.

"Crucially, retailers are seeing cash used in under half of all transactions for the first time, marking a real watershed in the payments landscape. However, cash remains an important payment method for many customers and will be with us for years to come.

He added: "It seems that more and more of us are turning to our debit cards to make payments especially as new contactless technology is proving incredibly popular for those lower value transactions that used to be the mainstay for cash.

"This change has been made possible by retailers investing heavily in new payments technology making it easier and quicker for customers to securely complete transactions in store. Card issuers are also driving this change in customer behaviour with around 55% of cards currently in use now featuring contactless technology."

One finding was that cards are increasingly being used for lower transaction values, with the average transaction value (ATV) for debit down 1.08% to £26.14. For credit/charge cards it was down 5.09% to £35.91, while cash ATV was actually up 7.31% to £9.21.

When measured as a percentage of sales transactions against 2014's figures, cash was down by 9.49% while debit and credit/charge cards increased 19.94% and 12.59% respectively. Measured as a percentage of sales turnover cash and credit/charge cards were down by 11.68% and 2.83% respectively, while debit cards were up by 7.88%.

Reports of the death of cash have, however, been greatly exaggerated – especially when taking into account the fanfare surrounding the launch of the new polymer £5 note in the UK last week. Retailers are also investing in cash management technology, with convenience store network Costcutter and Eat sandwich chain among the companies to have updated their systems in recent months.

Chairman, CEO and owner of ATM supplier YourCash Europe, Jenny Campbell, told Essential Retail that the recent launch of the new-look fiver – which will be followed by other value notes being updated to the new plastic-like material in the future – shows cash is "here to stay" despite the rise in digital forms of payment.

"I think it is hugely important that we continue to invest in developing cash, as we do other payment methods to facilitate greater consumer choice," she explained.

"In terms of implementation, I am hugely impressed with how seamlessly the Bank of England has incorporated the note into the UK cash market and we look forward to integrating the £10 and £20 polymer notes with our fleet of ATMs in the next couple of years."

The new tenner, which will feature an image of author Jane Austin, is set for circulation next year, while the update to the £20 note will take place in 2020.

Campbell, whose company works with a range of clients including casinos and convenience stores, added: "The £10 and £20 polymer notes that will follow will require more activity from ATM providers.

"Currently, the requirement from our clients is higher for ten pound notes than it is five. Our standard ATM process is structured by clients using the cash from their till to fill their ATM and in this case the ten pound is far more prevalent than the five pound note."

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Read the full BRC Payments Report 2015