Gift cards, vouchers and alternative payment methods on the increase.
UK shoppers did 9.7 per cent less of their shopping with cash in 2012 compared to the previous year.
Paying with cash is still the most popular choice for customers in the UK, says the British Retail Consortium, but the way people spend is changing.
The BRC's Cost of Payment Collection Survey - which covers nearly 10 billion retail payments in 2012 - shows that over half of transactions (54.4 per cent) are paid in cash.
However, cash use has declined as a percentage both of the number of transactions (down 6.7 per cent) and money spent (down 9.7 per cent). This is the first time in the survey’s 13-year history that both measures have seen a decline.
Credit and charge card use was down by 3.4 per cent as a percentage of transactions, while debit card use was up by 3.2 per cent.
Consumer gift card and voucher sales in Q1 2013 rose 4.6 per cent on a like-for-like basis, according to statistics from The UK Gift Card & Voucher Association.
Traditional paper and e-vouchers experienced growth of almost 20 per cent, whilst restricted loop gift cards showed the highest growth of 35 per cent.
Use of alternative payment methods more than doubled on the previous year, driven by manufacturers’ money-off coupons and online payment methods such as PayPal. They now account for five per cent of all transactions.
The average cost to a retailer of having a credit or charge card payment processed was 25 times higher than for cash (38p versus 1.5p). Credit and charge cards account for 10.6 per cent of transactions but over half (50.1 per cent) of costs.
Helen Dickinson, Director General of the British Retail Consortium, said: “New ways to pay and new ways to shop are shaping the retail landscape like never before. Changing customer preferences are driving the increase in debit card use – they’re helping people to manage their money better and are a natural fit for online shopping and self-service checkouts.
“Cash is still the most popular way to pay, but our survey shows how rapidly alternative and emerging methods are gaining ground, with growth more than doubling on the previous year, albeit from a low base. These methods will be the ‘ones to watch’ in the future, and retailers are investing heavily to make sure their customers have choice and convenience in ways to pay, whether in-store, at home or on the move."
Andrew Johnson, director general of the UKGCVA, added: “Over four per cent growth across the [gift card and voucher] industry is a very strong performance given the instability of the wider retail market.
"It’s both interesting and encouraging to see evidence that consumer confidence in vouchers so far seems to be relatively unaffected by fall-out from High Street administrations and issues around voucher redemption, as many consumers still turned to vouchers as a gifting option in the run up to Easter.”
