Debit and credit cards dominate retail payments landscape

The value of cash payments totalled less than credit card transactions in UK retail last year, as consumers continued their move towards plastic.

According to the British Retail Consortium’s (BRC) Payment Survey for 2018, debit card transactions were again the most popular form of payment, but the value of credit card spending trumped cash for the first time.

Debit card spending in UK retail totalled £216.4 billion, with credit and charge card transactions at £81.9 billion and cash at £77.7 billion.

In terms of volume of payments, cash was still above credit cards and accounted for 38.3% of retail transactions. However, in 2013 cash represented 52.8% of all transactions, highlighting the rapid shift to plastic forms of payment among the UK public.

But while many consumers are using cards out of convenience, it is ramping up handling costs for retailers.

The BRC said retailers spent £1.3 billion with third parties, which was an increase of £70 million on 2017. Each transaction cost retailers an average of 5.85 pence, up 17% year on year.

It stated that these additional costs are largely driven by the fees paid by businesses to credit and debit card companies, which increased by over 50% in 2018. The BRC has called for action to improve regulation of card payment fees.

Andrew Cregan, policy adviser for payments and consumer credit at the BRC, said: “With card payments accounting for almost 80% of retail sales, it is vital that the government takes action to tackle the soaring costs that card companies charge retailers.

“Without action we will see businesses put under further pressure and it will be consumers who are forced to pay the price.”