22 April 2008, 15:11 PM
  • Cautious customers, increasingly reluctant to spend money they haven't got, has prompted a cash comeback, meaning less card charges for shops.

New figures from the British Retail Consortium (BRC) show that despite card companies pushing plastic alternatives, cash has increased its dominance as a means of payment over the last 12 months. It is now used for 60% of all transactions, up from 54% last year, and is worth 34% of retail spending. 

This is interesting for retailers as cash is the most cost effective way to accept payment. On average, a shop is charged two pence for a cash transaction, the BRC reveals, while for a credit or a debit card, the cost will be 34 and eight pence respectively.

Retailers responding to the consortium’s Cost of Collection survey were charged £516 million in 2007 of which 82% (£424 million) related to card payments. BRC director general, Stephen Robertson, says, “These unjustifiable charges cost customers because they are so high retailers are forced to pass them on. As banks move to replace cash, they must acknowledge the very low costs they actually incur.

“Banks should not be exploiting new payment systems as a way of taking extra money from shoppers. There should be a lower fixed fee per transaction, which actually reflects the cost of processing, so new technology brings balanced benefits to retailers, consumers and banks.”