With Brits wary of spending money they do not have, the proportion of transactions using credit cards fell by 12.9% in a year while debit card use rose 15.8%.

Cash was involved in a smaller proportion of transactions than a year earlier but used for a greater slice of overall retail spending, says the BRC, which based its findings on nearly eight billion transactions in store and online.

Stephen Robertson, director general, BRC, says: "Hard-pressed customers are switching to cash and debit cards for the reassurance that they can't spend what they haven't got. At the same time, use of credit cards has dropped sharply. Cash remains king - used for more than half of all retail payments."

The trade group has also taken a swipe at the "unjustifiably-high charges" banks charge retailers for processing payments. In 2010 retailers taking part in the survey paid out a total of £659 million in fees for payment processing and cash collection.

Despite the efficiency of electronic systems, the average charge for processing a credit card payment was 37.1 pence compared with a debit card average of 9.2 pence, says the group.

Cash is used in 55% of transactions but only makes up 11.5% of retailers payment costs. In contrast, credit cards are used in 10% of transactions but account for a staggering 44.5% of retailers' costs. For debit cards it is 34% of transactions and 37.5% of costs.

Robertson says: "Unjustifiably-high payment charges are still being taken from retailers. The question is should this money be going into increasing banks' profits or to keeping shop prices down for customers? Reducing the charges banks impose so they genuinely reflect the actual costs involved in processing these transactions is the right answer."