For the second consecutive year, cash usage in the UK has increased, with more consumers turning to notes and coins to manage spending during challenging economic times.
According to the British Retail Consortium (BRC):
- Cash accounted for 19.9% of transactions in 2023, up from 18.8% in 2022.
- Debit cards remain dominant, rising to 62.0% of all transactions and accounting for 66.7% of spending. Combined with credit cards, card payments represented over 75% of transactions and 85% of spending.
- Overall transactions increased from 19.6 billion to 21.0 billion, while the average spend per transaction fell slightly from £22.43 to £22.03.
The rise in cash use highlights its continued importance for households facing financial strain amid the cost of living crisis. Cash provides a tangible way to manage spending, particularly for those who rely on physical money for budgeting.
While card payments dominate, the growing costs associated with card transactions are a significant concern. The total fees paid by UK retailers to banks and card schemes increased by 25% in 2023, costing retailers an additional £380 million, for a total of £1.64 billion in card fees.
Chris Owen, BRC payments policy advisor, urged the Payment Systems Regulator (PSR) to implement meaningful reforms:
“Card fees continue to rise at a substantial rate. The PSR must act swiftly, introducing price caps and rebalancing measures to address these harms.”
The BRC advocates for the growth of open banking payments, positioning it as a more cost-effective alternative to cards:
“Open banking should offer a fairer pricing model for retailers, both online and at the point of sale, without replicating the harms of the current card system.”
With cash usage on the rise and calls for reform in card fees intensifying, the focus on alternative payment solutions, such as open banking, may play a pivotal role in shaping the future of UK payments.