For the first time since at least a decade the use of physical cash is increasing, as households are returning to coins or banknotes for managing their finances during the cost-of living crisis.
According to the British Retail Consortium, 19% of transactions will be made in cash in the UK in 2022. This is up from 15% in 2021.
The BRC’s annual Payments Survey report started in 2013, and this is the first year that the BRC has seen an increase in the use of cash.
The report stated that “Faced by rising living costs, some people found cash a useful tool to manage their finances. They could track their daily expenditure .”
In an effort to better manage their budgets, and also reflect the pressure on consumers’ spending, they began making smaller payments more frequently last year.
As consumers shopped, the number of transactions increased, from 17.2 billion to 19.6 billion. The average transaction value also decreased, from £24.49 down to £22.43.
Report: The return of physical cash is also due to a natural return from coins and banknotes after the sudden switch to contactless during pandemic of coronavirus.
Cash usage is still well below the levels of 2020, when cash accounted for 30% of all transactions.
The BRC noted that “while a small number of people have returned back to their pre-pandemic ways, for the majority of the population the pandemic had a lasting effect on how much cash we transact”.
The trade association said that the recovery of cash usage in retail settings is “fairly minimal”, and “only a small increase in terms of total sales in value” — up from 8.2 percent in 2021 to 11% in 2022.
In 2022, card payments accounted for 76 percent of all transactions compared to 82 percent in 2021. Debit cards accounted for four out of five transactions.
In 2022, the popularity of alternative payment methods has increased from 2% in 2021 to 5% in 2022. This category includes such options as buy now and pay later.
Hannah Regan is the payments policy advisor at the BRC. She said that we are seeing a return to some of the payment trends from before the pandemic, such as smaller, but more frequent payments and a slight return to cash payments.