British shoppers used cash in only 15 per cent of transactions in 2021, half the level of the year before and down from nearly 40 per cent before the COVID-19 pandemic, retailers said on Friday.
The British Retail Consortium said government advice to go contactless during the pandemic, as well as a surge in online shopping, had accelerated an existing shift away from cash.
Debit cards accounted for 67 per cent of transactions last year, up from 54 per cent in 2020, while credit cards made up 15 per cent, up from 14 per cent, said the BRC, which represents major stores who accounted for almost 40 per cent of British retail sales last year.
Adjusting for the smaller average size of cash transactions, notes and coins were used to pay for just 8 per cent of retail spending last year, the BRC said.
Falling cash usage was making it more costly to handle notes and coins, the BRC said and asked the British government to do more to ensure it remained viable for shoppers.
In May, the government told banks to ensure cash remained an accessible payment method. It said at the time that 5.4 million adults relied heavily on being able to make cash transactions.
The BRC also said it wanted the government to allow regulators to limit payment providers’ ability to increase transaction fees pending a full investigation, and to enforce a court ruling banning certain fees.
“We need urgent intervention from the Payments Systems Regulator and the Treasury to stop card schemes from abusing their dominant market position,” BRC payments policy adviser Hannah Regan said.
Overall, the BRC said accepting card payments cost its members 1.3 billion pounds ($1.6 billion) last year.
Debit card transactions cost retailers an average of 0.273 per cent of the payment value to process, up from 0.265 per cent in 2020, which was more expensive than handling cash, the BRC said. Credit cards are more expensive still.
($1 = 0.8177 pounds)