Data: Retailers bear brunt of increased costs as pandemic accelerates death of cash

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New research has found that debit and credit cards accounted for more than four out of every five transactions in the UK last year, saddling retailers with spiralling processing costs as cash use dwindled during the pandemic.

The latest payments survey from the British Retail Consortium (BRC) found that debit and credit cards were used in 81% of retail transactions in 2020 – an increase from 78% in 2019.

Debit card payments were also on the rise, making up 54% of all transactions.

The shift towards card payments during the pandemic has resulted in cash accounting for only 15% of total spending in retail, down from 20% in 2019.

The survey found that cash is now used in 30% of individual transactions.

The report also pointed to a growing trend of larger basket sizes in 2020 as, although the number of store visits fell, consumers spent more when they did venture into bricks-and-mortar retail destinations.

While transactions fell by 13% from 19.1 billion transactions in 2019 to 16.7 billion last year, consumers spent on average 20% more when they did go shopping, with the average transaction value rising to £24.15 in 2020 from £20.16 pre-pandemic.

Surging card usage in the period led to surging costs for retailers, who incurred £1.3bn in transactions as debit card usage jumped 22% in the period to 7.2p per transaction.

The BRC estimates that the additional transaction fees equate to £46 per household annually, which it warns could potentially result in higher prices on products for consumers.

BRC payments policy advisor Andrew Cregan said: “The pandemic has accelerated the trend towards card payments, with more than four in every five pounds spent in retail now made with credit or debit cards.

“Basket sizes also rose as customers made bigger, but fewer purchases. 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.

“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.”