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Cash use drops by 14% in UK

The increase in online shopping and contactless card payments has driven a 14% fall in the use of cash by shoppers over the last five years, according to a survey by the British Retail Consortium (BRC).

New data reveals that a growing proportion of smaller payments previously made in cash are now being made in other ways. The availability of contactless cards, express stores and self-service tills as well as online sales have contributed to the increased use of debit cards to 50% of retail sales value in 2013, up by 11 % over the last five years.

Debit cards now account for 32% of the number of transactions compared to 30% last year.

However, cash still remains the dominant method of payment, with 53% of transactions still made in cash, although this has declined by 3% over the last year and 10% over the last five years.

The BRC's Payments Survey 2013 covers 60% or £191 billion in retail sales in 2013.

It tells a different story for credit cards as customers are spending the same amount in total but for fewer items, suggesting more considered purchasing.

During 2013 the share in transaction volumes fell by 13% (from 11% to 9%). The average transaction value was up by 12% on last year. This reverses a decline in average transaction values over the previous three years.

The BRC believes banks are still levying “unjustifiably” high charges on retailers’ card payments. The average cost to a retailer to process a credit or charge card payment is now 40.9p, up 18.3% in the last five years.

Credit and charge cards account for only 9% of transactions but almost half (48.7%) of costs.

At the same time, the cost to process a cash payment is now 1.3p and has decreased 38% in the last five years.
Cash accounts for 53% of transactions but 9% of costs.

Debit cards costs have increased by 4% in the last five years and cost 8.8p per transaction. They account for 32% of transactions but 37% of costs.

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