14According to a payments survey conducted by the British Retail Consortium, debit cards have overtaken cash to become the UK’s top payment method.
Debit cards have overtaken cash for the first time to become the UK’s top payment method according to a British Retail Consortium (BRC) survey.
In the BRC’s annual publication which measures the sales volumes and values of different payment channels employed by retailers across the UK, more than half of all retail purchases were found to be made by card. Although cards have long accounted for the majority of retail spending by value, 2016 saw cards also account for more than 50 percent of all retail transactions by volume.
The share of debit card transactions grew by 4.5 percent to almost 43 percent of all retail transactions, overtaking cash transactions which saw a 5 percent decline to 42 percent.
The primary drivers of change are the increased use of contactless payments by consumers in combination with a growing number of retailers investing in payment technology to accept cards, contactless payments, as well as new payment applications for both online and in stores.
Savings recorded by retailers on card handling charges following the introduction of the Interchange Fee Regulation (IFR) are thought to have facilitated retailers’ ability to make these investments to some extent.
At the same time, retail customers have become less reliant on credit cards as consumers continue to borrow less for day-to-day purchases. This contrasts with a broader trend of increasing consumer borrowing in the UK.
2017 will see the market face increasing challenges as rising costs, price deflation, and falling profitability hit hard. The British Retail Consortium claims that further regulatory action is needed on card fees as retailers spent more than £1 billion in 2016 to accept payments from customers. The cost of processing cards still remain relatively high, and so it is recommended that the government act to guarantee the benefits of the Interchange Fee Regulation (IFR) after Britain leaves the EU.
More here [BRC]