Fundamental changes in the UK retail industry as customers embrace new technology and new ways to shop are producing major changes in the relative importance of different payment methods. Customers did 10 per cent less of their shopping with cash in 2012 than 2011 (when cash usage increased). Paying with cash is still the most popular choice for customers in the UK but the pace of change in the ways people are choosing to buy is accelerating.

The major gainers have been debit cards, and newer methods such as PayPal, as online and self-service shopping grows. Increasingly, people also prefer debit to credit cards as they try to manage their under-pressure finances – leaving cash and credit cards the big losers.

The British Retail Consortium's (BRC) Cost of Payment Collection Survey published today, which covers nearly 10 billion retail payments, in 2012 shows that:

• over half of transactions (54.4%) are paid in cash (use has declined as a percentage both of the number of transactions (down 6.7%) and money spent (down 9.7% ). [This is the first time in the survey's 13 year history that both measures in cash usage have seen a decline.]
• credit and charge card use was down by 3.4% as a percentage of transactions to 21%
• transactions made on debit cards were up by 3.2 per cent to 58.2%
• use of alternative payment methods, now account for 5% of all transactions (more than double 2011), driven by manufacturers' money-off coupons and the rapid growth of comparatively new ways to pay such as PayPal and online payments.

BRC complaint about the level of bank charges and cost estimates
BRC repeated their annual complaint about bank charges, saying, "Survey also shows banks continue to levy unjustifiably high charges on retailers for handling card payments."

BRC cost estimates for payment schemes (average cost to the retailer) of a transaction at the Point Of Sale:

• credit or charge card payment processed 38p
• debit cards cost 9.4p
• cash 1.5p.