Debit card purchases accounted for 50% of retail sales in 2013 and are becoming the preferred method of payment for consumers buying expensive items such as gold engagement rings. Cash is being used less than ever causing retailers to invest in more convenient and easier ways to pay.

However, the steady decline of the use of cash does not change the fact that it is still the dominant method of payment. Shoppers are still cautious about using credit cards although many appear to be spending the same amount on them but on fewer items, such as one-off purchases like gold engagement rings. According to the British Retail Consortium’s (BRC) Payments Survey in 2013 this trend suggests that credit cards are being used for calculated purchases.

The BRC survey also found that banks are ‘still levying unjustifiably high charges’ on retailers when handling card payments. Retailers are now being charged an average of 40.9 pence to process a credit or debit payment, which is an increase of 18.3% over the last five years.

British Retail Consortium’s Director General Helen Dickinson said, “The recent pattern of spending on larger but fewer products on credit cards shows that customers are now feeling more confident than they did a year ago and reflects the wider consumer outlook of cautious growth.”

Ms Dickinson also commented on the hardship that retailers, especially smaller enterprises such as jewellery designers, still feel as a result of the high bank fees. “It is really disappointing that the average cost of accepting both credit and debit cards has increased over five years, while cash costs have gone down. Interchange fees cost the retail industry and its customers almost £1 billion in 2013. The much-welcomed European proposals to cap how much banks can charge retailers to process card payments are close to final approval, but in the meantime we continue to work with the UK Government and Payment System regulator to implement caps on UK fees without further delay, as has happened in other European countries.”

The BRC’s report reflected both good and bad news for retailers. While expensive items such as gold engagement rings were being purchased more often with credit or charge cards, the continued bite felt by smaller independent designers due to associated bank fees could definitely be seen as jeopardizing their growth and business success.

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