Debit and credit card transactions now account for more than four in every five pounds spent in 2020 (81%), a new report from the BRC has found.
According to the annual Payments Survey cash use now accounts for just 15 per cent of total spending in retail, though it still accounts for 30 per cent of individual transactions.
While card transactions went up from 78 per cent in 2019, cash use declined by 5 percentage points, from 20 per cent in 2019.
The survey has also revealed major changes in shopper behaviour, with consumers making fewer, but bigger shopping trips. While the number of transactions fell by 13 per cent (from 19.1bn in 2019 to 16.7bn in 2020), consumers spent on average 20 per cent more per transaction, leading to an increase in the average transaction value, from £20.16 in 2019 to £24.15 in 2020.
The report, however, notes that the overwhelming trend towards card payments in recent years has meant retailers incurred costs of more than £1 billion just to accept these payments from customers in 2020.
Debit cards, which accounted for over half of all transactions (54%) for the first time, have seen transaction fees rise by 22 per cent (to 7.2 pence per transaction).
The BRC warned that these additional costs can translate into higher prices for consumers in the backdrop of mounting costs from Covid, Brexit, global supply chain disruption and rising commodity prices.
“Despite the general movement to card payments, retailers are being punished through the soaring cost of accepting such payments,” Andrew Cregan, Payments Policy Advisor at the British Retail Consortium (BRC), said.
“Parliament needs to urgently intervene in this anti-competitive behaviour by regulating card scheme fees and abolishing interchange fees, both of which ultimately hurt consumers. Card firms are abusing their dominant market position, and this must come to an end.”
The BRC, along with other business groups, has recently called on the MPs to intervene and protect businesses and customers from soaring card costs, urging immediate action to tackle the “anti-competitive practices” in card payments.
