Banks’ plans to make cash a thing of the past may have been thwarted by consumers who are increasingly cautious with their money, according to retailers.
One in six transactions are now cash-based, 6% higher than last year, research by the British Retail Consortium (BRC) found. The organisation said the figures demonstrated consumers’ reluctance to use credit cards to spend money they don’t have.
The BRC welcomed the news, adding that on average, retailers are charged 2p to process a cash transaction, while the charge for a credit card is 34p, with a debit card transaction costing around 8p. It said the costs are ‘too high’ for retailers to absorb, and inevitably passed on to the consumer.
Survey respondents were, on average, charged around £424m for card payments last year.
Stephen Robertson, the BRC’s director general, said: “Reports of the death of cash are premature. Cash is not only alive, it’s thriving. Hard-up customers are increasingly reluctant to spend money they haven’t actually got in their hands.
“While total retail spending continues to grow, there’s a widening gap between the amount spent in cash and the amount spent using cards, suggesting customers want to keep tight control of their finances.”
Earlier this month, the BRC condemned a move by HSBC to issue its 10 million UK customers with Visa cards, calling it a ‘self-serving move to rake in millions more in charges’.
© Crimson Business Ltd. 2008