Business

Credit card falls 13% as shoppers avoid debt

Pin machine
Image caption Card transactions take longer and cost shops more to process than does cash

Credit card use fell last year as people turned to cash and debit cards to avoid borrowing, shopkeepers say.

The British Retail Consortium (BRC) which represents 90% of the UK's stores, say transactions involving credit cards dropped 12.9%.

The number of transactions involving cash also fell, although the average amount spent rose by 13% to £12.93. Debit card use jumped by 15.8%.

The BRC criticised the level of bank charges associated with credit cards.

It pointed out they are the most expensive payments they have to process.

On average in 2010, each retailer paid 1.7p per cash transaction to have the money transported and banked.

It said that the average charge for processing a credit card payment was 37.1p, compared with a debit card average of 9.2p.

Credit cards were used in just 10% of all transaction, but accounted to more than 44% of processing costs.

The BRC added that cash was the quickest way to pay.

Using physical money took an average of 27.2 seconds, it said, compared with an average 39.4 seconds for a card payment.

King cash

The BRC's annual Cost of Payment Collection Survey includes results from nearly eight billion transactions in store and online, 60% of the UK's annual retail sales.

Retailers reported fraud losses had fallen by 37% compared with 2009 after investment in technology, such as the latest secure card readers, new levels of internet security and note checkers at tills.

The BRC Director General, Stephen Robertson, said: "Hard-pressed customers are switching to cash and debit cards for the reassurance that they can't spend what they haven't got.

"At the same time, use of credit cards has dropped sharply. Cash remains king - used for more than half of all retail payments. "

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