Covid boosts card payments but cash stays in the game
UK debit and credit card transactions surpassed four in every five pounds spent in 2020 (81%, up from 78% in 2019), according to research by the British Retail Consortium.
The Covid pandemic and digital shift mean that cash use now accounts for just 15% of total spending in retail (down from 20% in 2019), though it still accounts for 30% of individual transactions.
The research also reveals that the pandemic has changed the way we shop, with consumers making fewer, but bigger shopping trips.
While the number of transactions fell by 13% (from 19.1 billion in 2019 to 16.7 billion in 2020), consumers spent on average 20% more per transaction. Thus, the average transaction value increased from £20.16 in 2019 to £24.15 in 2020.
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% (to 7.2 pence per transaction).
The BRC says that, amidst a backdrop of mounting costs from Covid, Brexit, global supply chain disruption and rising commodity prices, these card fees add further cost pressures to retailers.
Andrew Cregan, Payments Policy Advisor, British Retail Consortium, says: “The pandemic has accelerated the trend towards card payments. While cash use has declined in importance, it remains vital for many people who do not have access to other payment methods.”
“Despite the general movement to card payments, retailers are being punished through the soaring cost of accepting such payments.”
He concludes: “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.”
