Cash payments falling in the UK as shoppers move online

The use of cash to buy products in the UK has fallen into sharp decline as online shopping grows in popularity.

British shoppers did 10pc less of their shopping with cash in 2012, according to the British Retail Consortium’s survey of 10bn payments last year. 

Cash still accounts for 54pc of transactions in the UK, but its share of the number of transactions and total money spent has fallen for the first time as alternative methods, such as debit cards and PayPal, are increasingly used.

Helen Dickinson, director-general of the BRC, said: “New ways to pay and new ways to shop are shaping the retail landscape like never before.

“Changing customer preferences are driving the increase in debit card use – they’re helping people to manage their money better and are a natural fit for online shopping and self-service checkouts.”

The BRC said that credit card use also fell by 3.4pc, but debit cards rose 3.2pc and alternative payment methods such as money-off coupons and PayPal more than doubled. 

Ms Dickinson said it “beggars belief” that charges on credit cards remain “disproportionately high” as credit cards decline as a method of payment.

“They continue to rise even though credit card use has fallen,” she said. “It beggars belief that retailers incur average charges of 38p per credit and charge card transaction, 25 times more than for cash.” 

The BRC polls has been released after a poll revealed that retail sales sank at their fastest pace in more than a year over the last month.

A survey by the Confederation of British Industry showed that 23pc of retailers reported sales volumes were up on a year earlier but 33pc said they were down. The resulting balance of -11pc was the lowest since January last year. 

In another sign of anaemic wage growth, poor weather and high prices curbing consumer spending, most sectors – including clothing, footwear and household goods – saw sales fall, but grocery sales were broadly flat after a rise last month. 

Just a week ago, figures from the Office for National Statistics revealed a steep decline in retail sales during April and earlier this month, official numbers highlighted the squeeze on households, with wage growth of 0.4pc well below the rate of inflation. 

Although sales volumes remained below average for the time of year and orders fell faster than at any point since November 2011, retailers were feeling slightly more optimistic about the outlook, according to the CBI poll. 

The survey was conducted between April 24 and 15 May, with 137 firms taking part.