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The pandemic changed the way we pay, with cash
accounting for just 15% of all transactions in 2021
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90% of retail spending, and 82% of transactions, used
debit or credit card
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Retailers spent £1.3bn to accept payments from
customers in 2021
Today, the British Retail Consortium (BRC) published its latest
annual Payments Survey. The report
reveals that in 2021, as stores closed for lockdowns and the
public was advised to use contactless payments, cash usage fell
to just 15% of all transactions (down from 30% in 2020), while
82% were made on credit or debit cards (up from 67% in 2020).
More than four-in-five card transactions were made using debit
cards, with the rest made up of credit and charge cards.
As a proportion of total money spent, cash accounted for just 8%
of consumer spend (down from 15%), while credit cards rose
slightly to 23%, and debit cards rose significantly to 67% (up
from 59% in 2020).
The rise in the use of card payments in part reflects the
increase in online shopping in 2021, when 48.6% of non-food items
were purchased online. This figure has fallen to 39.9% in the
first 11 months of 2022, as more people returned to the high
street as the pandemic eased. As a result, it remains to be seen
whether this shift to card payments will stick.
Cash remains vital for many people, particularly vulnerable
groups who do not have access to other payment methods. However,
the decline in cash has made it harder for many firms to use cash
efficiently – increasing the costs associated with handling
physical money. Government will need to look at solutions to
ensure it remains a viable payment option for consumers.
While card usage soared, so did the costs associated with
accepting these payments. Retailers incurred costs of £1.3
billion just to accept card payments from customers in 2021.
Debit cards, which accounted for the majority of transactions,
saw scheme fees rise by 28% compared to 2020, and total Merchant
Service charges increased by 12%. This translated into an
additional £141 million in costs imposed by card firms onto
retailers just to process debit card transactions.
Amidst a backdrop of mounting costs from rising
energy prices, rising commodity prices, rising transport costs, a
tight labour market, and other supply chain disruption, these
excessive card fees add further cost pressures to retailers.
The BRC, along with other business groups, have long been calling
for intervention on anti-competitive practices in card payments
in order to protect British businesses. The following actions
must be urgently considered:
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Stop card fees rising: While the Payments
Systems Regulator undergoes their lengthy market reviews into
card fees, they must enact temporary interventions to stop card
fees rising during this period.
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Remove interchange fees: In 2020, the UK
Supreme Court ruled that card firm interchange fees were
unlawful, but these are yet to be abolished.
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Treasury Review: We call on the Treasury to
conduct its own review into the cost of accepting cards
Hannah Regan, Payments Policy Advisor, British Retail
Consortium said:
“With the public in and out of lockdown and cash usage
discouraged last year, over 90% of retail spending used debit or
credit card. With card usage soaring, already hard-pressed
retailers had to pay huge sums to accept these payments. We need
urgent intervention from the Payments Systems Regulator and the
Treasury to stop card schemes from abusing their dominant market
position.”
-ENDS-
Notes:
- Data for the BRC Payments Survey was gathered in 2022 and
covers the 2021 calendar year. Retailers participating in the
survey accounted for 40% of all UK retail annual sales turnover.
- Download the BRC Payments Survey 2022 here
