Cash usage grows for first time in 10 years

Cash usage grew for the first time in a decade last year, according to figures from the British Retail Consortium (BRC).

The research found that over the 12-month period, cash usage jumped to 19 per cent of all transactions compared to 15 per cent in 2021.

The BRC said that the numbers reflect a choice by many households to use cash to budget more carefully during the onset of the cost-of-living crisis, alongside a natural return to cash following the move to contactless during the pandemic.

The organisation welcomed the uptick, saying that the dominance of card payments has come at a "significant cost" to retailers.

According to the trade association, retailers spent £1.26 billion on card processing fees last year, including a 27 per cent increase in scheme fees and a seven per cent hike in interchange fees.

Card payments were used for 76 per cent of transactions vs 83 per cent in the previous year, with debit cards accounting for four-fifths of these transactions.

“We are now seeing a return to many of the pre-pandemic trends in payments, including smaller but more frequent purchases, and a slight return of cash payments," said Hannah Regan, payments policy advisor, BRC. "Unfortunately, what has not changed, is the ever-increasing scale of fees paid by retailers in order to accept card payments.

"Though alternative payment methods could provide much needed competition to the market, the dominance of card payments means it is essential that action is taken to prevent fees rising further.”

Overall retail sales increased by 4.3 per cent to £439 billion in 2022, although the BRC said that this was largely driven by rising prices caused by higher costs in the supply chain.

The number of transactions rose from 17.2 billion in 2021 - 47.2 million per day - to 19.6 billion in 2022 - 53.7 million per day.

During 2022, the average value fell from £24.49 to £22.43 as consumers made more regular but smaller purchases. This reversed a trend seen during the pandemic, towards less frequent, bigger, shopping trips – as people tried to avoid going out as often.

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