People use cash 'to manage budgets'
Consumers are increasingly using cash to pay for their shopping to manage their tight budgets, a study has found.Cash was used in 58% of retail transactions last year, up from 55% in 2010, but the cost of the average shopping basket also fell by £2.48 year-on-year to £10.45 as people kept strict controls over their purse strings, said the British Retail Consortium (BRC).
Debit cards accounted for 29% of transactions, down from 34% in 2010, while credit cards made up 11% of transactions, a broadly similar figure to the previous year.
The BRC said its findings also showed that banks are levying "unjustifiably" high charges on retailers for handling card payments and it called for the Office of Fair Trading (OFT) to take action.
Accepting cash is around 24 times cheaper for retailers than taking credit card payments, found the Cost of Payment Collection Survey.
The average cost to a retailer of having a credit card payment processed was 36.2p and 9.6p for a debit card, compared with just 1.5p to have cash transported and banked.
The study suggested people are using cash more often because it "helps them manage their money and prevents them spending money they haven't got". Cash was also found to be the quickest way to pay, taking an average of 27 seconds, compared with an average of 36 seconds for a card payment.
Households' budgets have been badly hit by soaring bills at a time of sluggish wage growth, although a recent fall in inflation has indicated that the pressure is easing slightly.
Tom Ironside, BRC director of business and regulation, said: "Customers have less money. They're buying things only as and when they need them, shopping more often but spending less each time, and they're more likely to be paying with cash."
He added: "Retailers are not cheerleaders for cash. Retailers sell things. Paying is a necessary final stage. It should be easy for customers to do that in the ways they want to and the cost to retailers should fairly reflect the costs banks face in processing those payments."
The average cost to a retailer of having a credit card payment processed was 36.2p and 9.6p for a debit card, compared with just 1.5p to have cash transported and banked.
The study suggested people are using cash more often because it "helps them manage their money and prevents them spending money they haven't got". Cash was also found to be the quickest way to pay, taking an average of 27 seconds, compared with an average of 36 seconds for a card payment.
Households' budgets have been badly hit by soaring bills at a time of sluggish wage growth, although a recent fall in inflation has indicated that the pressure is easing slightly.
Tom Ironside, BRC director of business and regulation, said: "Customers have less money. They're buying things only as and when they need them, shopping more often but spending less each time, and they're more likely to be paying with cash."
He added: "Retailers are not cheerleaders for cash. Retailers sell things. Paying is a necessary final stage. It should be easy for customers to do that in the ways they want to and the cost to retailers should fairly reflect the costs banks face in processing those payments."
© 2013 Press Association