UK shoppers are using less cash

July 14, 2014

U.K. customers are using less cash than ever before, as retailers make it easier and more convenient to shop and pay through technologies such as contactless cards and self-checkout, the British Retail Consortium’s Payments Survey 2013 reports.

The survey covers 60 percent, or £191 billion (US $391.95 billion), in U.K. retail sales in 2013, according to the trade association.

The BRC's data reveals that a growing proportion of smaller U.K. payments previously made in cash are now being made in other ways. "The availability of contactless cards, handy express stores and self-service tills as well as online sales have contributed to the increased use of debit cards," the BRC said.

Over the previous five years, the use of debit cards in stores rose by 11 percent to account for 50 percent of retail sales value in 2013. During the same time period, there has been a decline in the average debit card transaction value, and a 14-percent drop in the value of cash payments, according to the BRC.

Debit cards accounted for 32 percent of the total number of transactions in 2013, compared to 30 percent in 2012. However, cash remains the dominant method of payment, with 53 percent of transactions still made in cash in 2013 — although this declined by 3 percent compared to 2012 and 10 percent over the previous five years.

According to the BRC, U.K. credit card users are spending the same amount in total but for fewer items, suggesting more considered purchasing. During 2013, credit cards' share of transaction volumes fell by 13 percent, from 11 percent to 9 percent, of transactions volumes. The average credit card transaction value was up by 12 percent on 2012.

New ways to pay

"Customers are taking advantages of new ways to shop and pay," BRC Director General Helen Dickinson said. "The availability of contactless cards, handy express stores and self-service tills as well as online sales has increased the use of debit cards for smaller payments in place of cash."

The fact that cash use is down 14 percent in the last five years is a milestone in the development of the U.K.'s digital economy, Dickinson said. "It shows that customers are embracing digital shopping whether online or on the high street and retailers are adapting and evolving to meet the demand with excellent services," she said. "However, it is important to note that cash still remains dominant in the overall number of transactions."

Trends

According to the BRC, factors responsible for the growth in debit card usage include: 

  • Customers responding to banks' and retailers' marketing initiatives highlighting the use of contactless cards, which are mainly debit cards, as a cash replacement for transactions below £20 ($33.51);
  • Changing development of smaller stores format in the food sector that are generating smaller average basket size;
  • Promotion by retailers of the benefits of using self-service facilities where card use is being seen by their customers as a convenient way to pay; and
  • Increased use of debit cards in online shopping.

Self-service

During 2013, the conversion of manned POS to accept contactless cards continued in the U.K. “Now 35.3 percent of all manned POS terminals have the capability to accept contactless cards,” the BRC said in its report:

"This is a 53.3-percent increase on the previous year. During 2013, the growth of self-service checkouts increased by nearly 12 percent and now account for circa 17 percent of total payment terminals in retailer outlets. Currently, circa 90 percent of SSCs accept both cash and cards as payment methods. Only 9.1 percent of SSCs now have the capability of handling contactless cards — an increase of 29.6 percent compared to 2012. A major expansion of this capability is anticipated within the near future."


Topics: Consumer Behavior, Kiosks / Self-Service, Payments, Self-Checkout


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