Cash was used in under 50% of all retail transactions across the UK in 2015, according to the British Retail Consortium’s (BRC) annual Payments Survey.
Compared to 2014, cash usage in retail transactions has fallen by five percentage points, down to 47.15 percent of all retail transactions in 2015.
BRC says this drop is the biggest in five years and means that almost 20 percent fewer transactions are made with cash than in 2011.
BRC Director of Business and Regulation, Tom Ironside, said:
“Though the use of cash has been in decline for some time now, this year it has seen a significant dip. Crucially, retailers are seeing cash used in under half of all transactions for the first time, marking a real watershed in the payments landscape.
However, he did also add, “Cash remains an important payment method for many customers and will be with us for years to come.”
The BRC also highlighted a key reason for cash’s decline: found the cost of handling debit and credit card transactions for those retailers participating in the survey has reduced by around £159 million. It says these savings were down to some early changes that became available to some retailers by debit and credit card schemes in advance of the implementation of the new Interchange Fee Regulation.
According to new research from Barclaycard, SMEs in the UK are losing out on more than £8.8bn each year by not accepting credit and debit card payments – an 18% increase compared to just two years ago.
Another crucial reason has been contactless. Ironside pointed out that contactless technology has become extremely popular for lower-value transactions – which he stresses used to be cash’s mainstay. Spending using the technology has increased by 173% by value and 112% by volume.
“This change has been made possible by retailers investing heavily in new payments technology making it easier and quicker for customers to securely complete transactions in store. Card issuers are also driving this change in customer behaviour with around 55% of cards currently in use now featuring contactless technology,” Ironside said.
Contactless tech’s ubiquity has also increased people’s expectations of being able to pay by card. If these expectations are not met, customers are likely to walk away. In fact, a third of UK adults (32%) would consider walking away from a retailer if they could not pay by card and a quarter (24%) have done so in the last 12 months.
More than four in 10 shoppers (44%) pay by card more frequently than they did 12 months ago, with the average UK adult now carrying less than £25 in cash.
Sharon Manikon, Barclaycard Director of Customer Solutions said: “Today’s time poor, busy shopper wants to pay quickly and easily and SMEs who don’t capitalise on this demand are likely to miss out on an increasing number of sales each year. Yet small businesses can easily buck this trend by accepting credit and debit card payments, which contrary to the concerns of some, are simpler and more cost-effective to set up than ever before.
Nine out of ten consumers use their smartphones more than any other device, and consumers would also prefer to use biometrics over PINs - with fingerprints being the preferred method, according to a new Mastercard survey.
Square has introduced a new update to its contactless and chip readers that reduces transaction speed to 4.2 seconds.
It should come as no surprise that digital payment volumes are continuing to increase with annual growth projected to top 10% for the first time to reach 426.3 billion transactions, according to the new World Payments Report (WPR) from Capgemini and BNP Paribas.
Identity, biometrics, fraud, and the payments user experience were the topics discussed at TALKINGTECH’s inaugural Future of Digital Payments and Collections event this week.