Cash Usage up reports BRC

The BRC Payments Survey 2023 reports that UK retail sales rose 4.3% to £439.5bn in 2022, although this was largely due to rising prices resulting from increased costs throughout the supply chain. However, the number of transactions rose from 17.2bn in 2021 (47.2m per day) to 19.6bn in 2022 (53.7m per day).

Average Transaction Value fell from £24.49 to £22.43, as consumers shopped around more and made more regular, but smaller, purchases. This reverses a trend seen during the pandemic when consumers avoided going out often and tended towards less frequent, bigger, shopping trips.

The report drills down into several areas of particular interest:

By Transactions
Cash usage grew for the first time in a decade, rising to 19% of all transactions (from 15% in 2021).

This reflects a choice by many households to use cash to budget more carefully to manage the challenges of the cost-of-living increases. It also shows a natural return to cash usage following the move to contactless during Covid.

Card payments were used for 76% of transactions (83% in 2021), with debit cards accounting for four-fifths of these transactions.

By Spending
Cards accounted for the overwhelming proportion (85%) of money spent, with debit cards taking three-quarters of this spending. They are used more often than credit cards but for smaller value transactions.

Meanwhile, cash increased to 11% of consumer spend (8% in 2021).

The cost of card payments

The dominance of card payments comes at a significant cost to retailers. Retailers spent £1.26 billion on card processing fees; this includes a 27% increase in scheme fees and a 7% increase in interchange fees (as percentages of turnover) in 2022. Alternative payment methods saw a rise in popularity in 2022, from 2.0% to 4.9% of transactions. Methods such as Open Banking and Buy-Now Pay-Later (BNPL) are starting to offer some competition to card payments.

The increase in cash usage – both by spend and transaction numbers – is welcome.

BRC members, along with many other retailers, are committed to accepting cash payments, supporting vulnerable groups and those using cash to budget. Loomis is entirely supportive of that position and adds its voice to that of BRC – that cash acceptance needs to remain a viable option for merchants and customers across the whole ecosystem.

Note:
Data for the BRC Payments Survey was gathered in 2023 and covers the 2022 calendar year. Retailers participating in the survey accounted for 35% of all UK retail annual sales turnover.