Contactless cards, online sales and self-service tills are contributing to a steady decline in the use of cash by UK consumers says the British Retail Consortium.
New data reveals that a growing proportion of smaller payments previously made in cash are moving to debit cards, which now account for 50% of retail sales value in 2013, up by 11% over the last five years. Over the same time period there has been a decline in the average debit card transaction value, and in the use of cash by 14%.
However, cash remains the dominant method of payment, with 53% of transactions still made in loose change, although this has declined by three per cent over the last year and 10% over the last five years.
The BRC's Payments Survey 2013 covers 60% or £191 billion in retail sales in 2013.
The figures are broadly in line with recently released data from Halifax Bank, which shows that debit cards are now used in 56% of all transactions and the use of notes and coins on the wane.
For retailers, the switch to plastic is not entirely welcome, with the BRC accusing banks of levying "unjustifiably high" charges for handing card payments. The average cost to a retailer to process a credit or charge card payment is now 40.9 pence, up 18.3% in the last five years. Credit and charge cards account for only nine per cent of transactions but almost half (48.7%) of costs, says the retailer lobby group
At the same time, the cost to process a cash payment is now 1.3 pence and has decreased 38% in the last five years. Cash accounts for 53% of transactions but nine per cent of costs. Debit cards costs have increased by four per cent in the last five years and cost 8.8 pence per transaction. They account for 32% of transactions but 37% of costs.