Cash usage has grown for the first time in a decade as households look to balance their budgets amid the cost-of-living squeeze, according to the British Retail Consortium (BRC).
Across the UK, coins and banknotes accounted for nearly a fifth (19%) of transactions in 2022, the BRC’s annual Payments Survey found.
Its report said: “This year’s Payments Survey shows an increase in cash usage for the first time in a decade, up from 15% (in 2021) to just under 19% of transactions (in 2022).
“Faced with rising living costs, cash was a useful tool for some people to manage their finances and track their day-to-day spending.”
The increase also reflects a natural return to cash following the move to contactless during the coronavirus pandemic, the report said.
We are now seeing a return to many of the pre-pandemic trends in payments, including smaller but more frequent purchases, and a slight return of cash payments
Hannah Regan, BRC
The BRC said it is the first time since its reports started in 2013 that it has seen a year-on-year increase in cash usage.
The report also noted: “However, the recovery in cash use in retail is fairly minimal, with only a relatively small increase as a share of total sales by value, up from 8.2% in 2021 to 11% in 2022.
“It appears that whilst a small percentage of people have returned to pre-pandemic habits, for a large portion of the population, the pandemic has had a lasting impact on how much we transact in cash.”
Card payments were used for 76% of transactions in 2022, with debit cards accounting for around four in five of these transactions.
Retailers spent £1.26 billion on card processing fees in 2022, the BRC said.
Alternative payment methods increased in popularity in 2022, from 2% of transactions in 2021 to 5% in 2022.
This category includes options such as buy now, pay later.
People have also been making smaller but more frequent payments as they manage their budgets.
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The number of transactions increased from 17.2 billion in 2021 (47.2 million per day) to 19.6 billion in 2022 (53.7 million per day) and the average transaction value fell from £24.49 to £22.43, as consumers shopped around.
Hannah Regan, payments policy adviser at the BRC said: “We are now seeing a return to many of the pre-pandemic trends in payments, including smaller but more frequent purchases, and a slight return of cash payments.”
