Debit cards used more often than cash by UK shoppers says BRC
It’s official, Britons are now spending money using debit cards more often than cash. It hasn’t quite reached the almost-cashless level that countries such as Sweden have achieved, but cash is definitely less important for a growing number of shoppers.
The British Retail Consortium said that for the first time the volume of retail purchases made by card (including credit cards) now accounts for more than half of all customer transactions.
Its latest annual Payments Survey showed that this has partly been driven by UK customers increasingly using cards for lower value payments as contactless payments prove even more convenient for them than using cash.
Debit cards already had a larger value share of transactions and last year this edged up only slightly to 54.1% (£189.6bn). Cash was used to pay for £81.5 billion worth of goods in 2016 – accounting for 23% of sales value. But while the value share of cards and cash has been fairly steady, it's in the volume of card or cash purchases that big changes are happening and cash continued to see a steep decline in 2016.
The share of debit card transactions grew 4.5% to almost 43% of all retail transactions by volume, overtaking cash transactions which saw a 5% shrinkage in its share of retail purchases to account for 42%. Falling average transaction values (ATV) of card payments, both in debit and credit cards, shows that cards are increasingly displacing cash for lower value payments.
Contactless is key here. It first made an impact on buses and trains but the increase in the contactless limit from £20 to £30 helped fuel its growth in stores and as ever-more stores switch on to the payment method, the move away from cash is only likely to accelerate.
The BRC said cards have become the dominant payment method “as retailers’ investment in payment technology has facilitated greater customer choice over how they pay for their goods both in store and online.”
Interestingly, it also said that retail customers are less reliant on credit. Retail spending on credit cards has fallen and represents a smaller share of retail purchases by value. “This shows consumers borrowing less for day-to-day purchases, in contrast to wider growth in unsecured consumer lending in the UK,” the BRC said.
It seems that UK shoppers are still borrowing money to find large purchases but prefer to fund everyday purchases with money they know they have rather than borrowing.
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