Some 90 percent of retail spending and 82 percent of transactions were carried out on debit or credit cards in 2021 in the UK, according to the British Retail Consortium’s (BRC) latest Payments Survey.
The BRC’s annual Payments Survey has revealed that card payment usage continued to increase in 2021, with cash accounting for just 15 percent of transactions, which was down from 30 percent of payments in 2020. Meanwhile, card payment usage was up from 67 percent in 2020.
More than four-in-five card transactions were made using debit cards, with the rest made up of credit and charge cards.
The BRC suggests that the rise in the use of card payments in part reflects the increase in online shopping in 2021, when 48.6 percent of non-food items were purchased online.
This figure has fallen to 39.9 percent in the first 11 months of 2022, as more people returned to the high street as the COVID-19 pandemic eased.
As a result, the BRC has said it is uncertain whether this shift to card payments will stick.
Due to dwindling cash use, the trade association has warned that it is becoming unsustainable for many retailers. “Government will need to look at solutions to ensure it remains a viable payment option for consumers,” the BRC said.
Costs associated with accepting card payments also soared, the BRC said.
For example, retailers incurred costs of £1.3bn just to accept card payments from customers in 2021. Debit cards, which accounted for the majority of transactions, saw scheme fees rise by 28 percent compared with 2020, and total merchant service charges increased by 12 percent.
This translated into an additional £141m in costs imposed by card firms onto retailers just to process debit card transactions.
“Amidst a backdrop of mounting costs from rising energy prices, rising commodity prices, rising transport costs, a tight labour market, and other supply chain disruption, these excessive card fees add further cost pressures to retailers,” the BRC said.
Now, the BRC, which is part of the Axe the Card Tax campaign, has called on the government and regulators to take action on what it believes are anti-competitive practices in card payments to protect British businesses.
While the Payments Systems Regulator “undergoes their lengthy market reviews into card fees”, the BRC has said that the authority must enact temporary interventions to stop card fees rising during this period.
In addition, the BRC has said that, in 2020, the UK Supreme Court ruled that card firm interchange fees were unlawful, but these are yet to be abolished.
Meanwhile, the trade association has called on HM Treasury to conduct its own review into the cost of accepting cards.
“With card usage soaring, already hard-pressed retailers had to pay huge sums to accept these payments,” said Hannah Regan, payments policy advisor at the BRC. “We need urgent intervention from the Payments Systems Regulator and the Treasury to stop card schemes from abusing their dominant market position.”