Debit cards overtake cash as top payment method
Written by Anthony Strzalek
Debit cards have overtaken cash to become the number one payment method in the UK, according to figures from the British Retail Consortium (BRC).
The annual Payments Survey reveals that, for the first time, retail purchases made by card account for more than 50 per cent of all customer transactions by volume.
According to BRC, this has partly been driven by UK customers increasingly using cards for lower value payments and retailers’ investment in payment technology facilitating greater customer choice over how they pay for their goods both in store and online.
The survey also revealed that new regulations have helped deliver savings for retailers. Investment in payments has been boosted by savings of around £500 million for retailers and their customers from the EU Interchange Fee Regulation (IFR), which caps some of the fees for handling credit and debit card transactions.
However, despite these savings from the IFR, retailers still spent over £1 billion last year to accept payments from customers and the cost of processing cards remains high, particularly for credit cards.
The research also found that retail spending on credit cards has fallen and represents a diminished share of retail purchases by value. This shows consumers are borrowing less for day-to-day purchases, in contrast to wider growth in unsecured consumer lending in the UK.
BRC policy advisor for payments and consumer credit, Andrew Cregan, said: “A growing number of retailers have invested in payment technology to accept cards, contactless payments and new payment applications both online and in store. In part, this has been facilitated by the Interchange Fee Regulation, which was introduced across the European Union following a successful campaign by the BRC and has led to a significant fall in the cost of collection that benefits retailers and their customers.
“Looking ahead, the government should act to retain the benefits of the IFR for retailers and their customers after the UK leaves the EU and introduce further regulatory action to address the alarming increase in other card fees and charges at a time when the retail industry is facing acute cost pressures elsewhere.”