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BRC annual payment survey shows cash use is on the rise

Paying with cash is more common than a year ago and accepting customers' payments by cash is, on average, 24 times cheaper for retailers than credit card payments.

The British Retail Consortium (BRC) findings (published Friday 8th June) make clear that, at a time when many household budgets are under severe pressure, customers are:

- Using cash more often because it helps them manage their money and prevents them spending money they haven't got;

- Shopping more often but spending less each time.

Cash was used in 5.7 per cent more transactions in 2011, accounting for 58 per cent of all transactions. But the cost of the average shopping basket fell to £10.45 in 2011 from £12.93 in 2010.

The figures are from the BRC's latest annual Cost of Payment Collection Survey which covers 2011 and includes results from around 9.4 billion transactions of all types. They add up to 59 per cent of total UK retail sales making this the largest and most comprehensive survey of its kind.

The survey also shows banks continue to levy unjustifiably high charges on retailers, and therefore customers, for handling card payments. The average cost to a retailer of having a credit or charge card payment processed was 36.2 pence while for a debit card it was 9.6 pence. But the cost of having cash transported and banked averaged just 1.5 pence, down from 1.7 pence the previous year as retailers invest to achieve greater efficiency.

The 58.3 per cent of all retail transactions made with cash (5.5 billion of the 9.4 billion covered by the survey) account for only 11.1 per cent of retailers' costs while credit and charge cards are 11.0 per cent of transactions but 51.1 per cent of costs.

In a historic development last month, a European Court ruling upheld a decision outlawing so-called interchange fees levied on retailers by MasterCard for processing credit and debit card payments from customers in other EU countries.

The BRC says its evidence shows fees levied on domestic card transactions are also unjustifiably high and it hopes the OFT will now take similar action.

The BRC survey also found cash remains the quickest way to pay taking an average 27 seconds, compared with an average 36 seconds for a card payment.

Tom Ironside, British Retail Consortium 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.

"In 2010 financial worries were putting people off running-up debt and they turned away from credit cards. Now times are even tougher and overall card use is down by 10.5 per cent as people have switched to cash to better manage their spending.

"But 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.

"There can be no justification for such dramatic differences in charges. They're an unjustifiable tax on retailers and customers. And more efficient technology should result in charges going down not up.

"That was the basis of our European case against MasterCard's charges and the judges agreed they were anti-competitive and must be removed. Our evidence shows fees on domestic cards transactions are also unjustifiably high. The Office of Fair Trading should follow the landmark European ruling with rapid action in the UK."

Source : The BRC
www.brc.org.uk/brc_news_detail.asp?id=2231&kCat=&kData=1

10 June 2012
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Thank you for the excellent presentation that you gave at Woodbury Park on Thursday morning. It was very interesting and thought-provoking for our Retail members. The feedback has been excellent.

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Martin Elliott. Chief Executive - Home Hardware.
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