Use of cash up for first time in a decade

The British Retail Consortium (BRC) has revealed in its Payments Survey 2023 that cash usage has grown for the first time in 10 years as shoppers budget while prices rise.

Payments made with cash have risen 4% in 2022, from 15% of total transactions in 2021.

The BRC said this reflects a choice to ‘budget more carefully’ by households. Card payments were used for 85% of spending, with debit cards accounting for three-quarters of spending. Meanwhile, cash increased to 11% of consumer spend (8% in 2021).

One retailer has noticed the trend continuing into 2023.

Julie Kaur Duhra, Premier Jules Convenience Store, Telford, Shropshire, told Better Retailing: “I’ve noticed it recently – in the last six months there have been a lot college students with cash, more five-pound notes about.”

UK Finance reported in September that nearly 22 million people only used cash only once a month or not at all last year, compared to less than one million who mainly used cash.

Hannah Regan, payments policy advisor, British Retail Consortium, said: “We are now seeing a return to many of the pre-pandemic trends in payments, including smaller but more frequent purchases, and a slight return of cash payments. Unfortunately, what has not changed, is the ever-increasing scale of fees paid by retailers in order to accept card payments. Though alternative payment methods could provide much needed competition to the market, the dominance of card payments means it is essential that action is taken to prevent fees rising further.” 

The BRC said  the increase in cash usage – both by spend and transaction numbers – is ‘welcome’, and that the government should ensure that cash acceptance is a ‘viable option for merchants and customers across the whole ecosystem’, as it supports vulnerable groups and helps those needing to budget.

Card payment have also cost retailers a significant amount, as 2022 saw retailers spend £1.26bn on card processing fees; this includes a 27% increase in scheme fees and a 7% increase in interchange fees (as percentages of turnover).

The BRC is calling for reforms in the payment market, a treasury overview, and the growth of opening banking without replacing the existing card system.