Today, The British Retail Consortium (BRC) has published its annual BRC Payments Survey, showing the changing way in which people made payments in 2024.
This year’s survey reveals a significant decline in the use of credit cards, from 14.2% of transactions to 12.6%. With higher interest rates making credit cards a more expensive way to shop, consumers turned to debit cards where usage increased from 62.0% to 64.0% of transactions.
As the cost of living crisis eased, some customers returned to old habits. The weekly shop showed signs of a comeback with consumers making fewer but larger transactions. The total number of transactions fell from 20.9 billion to 20.4 billion while the ATV rose across all payment types.
While cash usage declined it still remains an important payment method for many customers, accounting for almost a fifth (19.2%) of all transactions, though the ATV was significantly smaller than other payment methods. Despite their declining popularity, for larger transactions, consumers preferred using credit cards which offer additional protections for shoppers, says BRC.
More shoppers were exploring less traditional payment methods than ever before, particularly for larger transactions. This included the use of gift vouchers, PayPal and Buy Now Pay Later.
Retailers and the BRC have long called out the "significant, unjustified rise" in the cost of processing card payments. Total card fees fell slightly in 2024 compared with 2023. However, at £1.48b, the fees paid by retailers have more than doubled since 2019.
In April, the Payments System Regulator proposed increasing transparency on fees charged to merchants and acquirers. This falls well short of what is needed, says the BRC, which is calling for: a long-term price cap to meaningfully lower scheme and processing fees and bring lasting reform to the market; given the 8% rise in commercial card fees (by turnover), the BRC is calling on the PSR to initiate a market review into Commercial Card interchange fees to ensure the whole payment market is functioning effectively; and it wants to see the growth of Open Banking in the UK, so that it can be a viable alternative to cards both online and at PoS, at a fairer price to retailers.
Chris Owen, payments policy advisor at the BRC, says: “As interest rates peaked in 2024, the use of credit cards fell as customers switched to lower interest forms of payment. However, with cards still accounting for the vast majority of transactions and card fees now more than double the level they were six years ago, only a long-term cap on card fees would bring much needed relief to retailers.
"Looking ahead, as the PSR transitions into the Financial Conduct Authority next year, it is vital that the FCA carries this work forward, delivering fairness and transparency in a market long hampered by competition issues and unjustified fee increases.”
