Paying in-store with cash is more common than a year ago as recession-hit customers try to keep track of their spending, according to the British Retail Consortium (BRC), which is also calling for action to force down interchange fees.
BRC figures, based on over 9.4 billion transactions in shops, shows cash was used in 5.7% more in 2011 than the previous year, accounting for 58% of all payments. In contrast, the percentage of transactions carried out by card fell by 10.53%. In 2011, debit cards made up 29.1% and credit and charge cards 11%.
By value, cash accounted for 32.03% of 2011 sales, compared to 45.65% for debit cards and 21.47% for credit and charge cards. The slow death of cheques continues, making up only 0.19% of retail sales turnover.
Tom Ironside, director, business and regulation, BRC, says: "Customers have less money. They're buying things only as and when they need them, shopping more often but spending less each time, and they're more likely to be paying with cash."
The BRC is using the figures' publication to renew its calls for card interchange fees to be slashed. The average cost to a retailer of having a credit or charge card payment processed is 36.2 pence while for a debit card it is 9.6 pence. Meanwhile, transporting and banking cash costs just 1.5 pence on average.
The consortium claims that the 58.3% of all retail transactions made with cash account for only 11.1% of retailers' costs while credit and charge cards are 11% of transactions but 51.1% of costs.
Citing last month's EU court dismissal of MasterCard's challenge against a European Commission ruling that the firm's cross-border interchange fees violated competition law, the BRC now wants UK action.
"Our evidence shows fees on domestic cards transactions are also unjustifiably high. The Office of Fair Trading should follow the landmark European ruling with rapid action in the UK," says Ironside.