For the first time, debit cards have overtaken cold, hard cash to become the number one preferred payment method for UK consumers, research from retail trade body the British Retail Consortium (BRC) shows.
According to a new survey from the BRC, payment by card now represents more than 50% of all retail purchases by volume in the UK. The body said the growth had in part been driven by UK shoppers using their debit cards to pay for lower value buys.
The BRC’s annual Payments Survey also suggests that cards have made it to the number one spot thanks to retailers’ focus on and investment in payment technologies, which has given shoppers much more varied choice as to how they pay for goods – both at bricks and mortar stores and when online.
Regulations have helped deliver savings
The BRC said the introduction of the EU Interchange Fee Regulation (IFR), which puts a ceiling on some of the charges levied for handling debit card and credit card purchases, has helped return around £500 million in savings for retailers – and their customers. But the group is warning that the cost of processing card payments is still too high for retailers. It said that last year, firms spent more than £1 billion so they could accept such payments from their customers.
Credit is not what it used to be
Once upon a time, it seemed like we were all in thrall to our flexible friend, but not today – at least not when it comes to smaller, low-value buys. The consortium said that today, shoppers are not as reliant on credit as a payment method as they once were. In fact, retail spending through credit cards has dropped and now makes up a far lower share of retail purchases. In short, shoppers are borrowing less for bread and butter purchases – but there is still growth in unsecured lending.
Commenting on the new research, Andrew Cregan, policy advisor for payments and consumer credit at the BRC, said that the flux of retailers who are investing in payment technologies so they can accept a range of payments, including cards and contactless payments, could be partly credited with spurring the switch to debit. Mr Cregan also added that the Interchange Fee Regulation has succeeded in delivering a “significant fall” in payment processing fees, which is of benefit to both retailers and their paying customers.