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NEWS STORY
CUSTOMERS CHOOSE CASH IN RECESSION
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| March 23, 2009 |
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Reports of the demise of cash are greatly exaggerated. Despite the impression created by some banks, it is the most popular means of payment and the most cost effective for retailers.
New figures from the British Retail Consortium (BRC), published today (Monday), show cash is used for 56 per cent of all transactions and 33 per cent of all retail spending is done with cash.
The BRC's Annual Cost of Collection survey includes results from 16,000 shops, large and small, multiples and independents, with a combined sales turnover of £139 billion a year, over half of total UK retail sales. With recession leaving many customers reluctant to spend, the report shows cash is in favour as a way of helping them monitor and control their spending.
The BRC report also highlights the huge extra costs banks impose on retailers for processing card transactions.
An average cash transaction costs retailers 2 pence; a debit card payment costs 8 pence, but they are charged a massive 35 pence when a customer uses a credit card.
The BRC broadly supports new payment technologies such as ‘contactless' systems, which are increasingly being pushed as alternatives to cash but banks must reduce their charges to better reflect the costs they actually incur in processing these transactions.
If charges for every payment method were as low as they are for cash, over £800 million in cost savings would be passed on to customers through lower shop prices.
At a time when many retailers are being squeezed between falling demand, the need to discount and a range of rising costs, the size of these charges threatens the viability of some.
British Retail Consortium Director General Stephen Robertson said: "Reports of the death of cash are greatly exaggerated. Despite the impression created by some banks, it's the most popular way of paying and the cheapest for most retailers.
"But banks are pushing new cards and payment technologies hard. Not surprising when they stand to make so much more in charges. Despite the recession, they are looking to maximise their profits and protect their own interests at the expense of customers who ultimately meet these costs.
"Retail is a highly competitive industry. If charges for every payment method were as low as they are for cash, over 800 million pounds of savings would be passed down to customers through the prices they pay. There should be a lower fixed fee per transaction which actually reflects the true cost of processing."
The BRC report shows, in 2008, cash was used for 56 per cent of all transactions, slightly down on the 60 per cent recorded in 2007. In 2008, 33 per cent of spending in retail outlets was with cash, virtually unchanged from the 34 per cent in 2007.
The BRC is calling for ad valorem (percentage) charging for credit card fees to be replaced by a fixed fee per transaction. It costs no more to process a high value transaction than a small one. Retailers also continue to object to the "Honour All Cards" rule, which compels them to accept all cards branded with the card scheme logo. Depending on the type of card and where it is used, there are big differences in the fees retailers pay.
Notes to Editors:
The figures in the Cost of Collection Survey, published today (Monday) relate to the calendar year 2008.
The BRC's Cost of Collection Survey is available to journalists from the BRC press office.
Media Contacts:
BRC Press Office 020 7854 8924, Out of hours 07793 874511
krishan.rama@brc.org.uk
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