The British Retail Consortium (BRC) has released its 2024 Payments Survey, revealing a notable shift in consumer payment behaviour. The use of credit cards declined from 14.2% of transactions in 2023 to 12.6% in 2024, as rising interest rates made credit a more costly option. In contrast, debit card usage increased from 62.0% to 64.0% of transactions.
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The survey also highlighted a return to larger, less frequent shopping trips. Total transactions fell from 20.9 billion to 20.4 billion, while the average transaction value rose across all payment methods. Despite a decline in cash use, it remains significant, accounting for 19.2% of all transactions, though with smaller average values. Credit cards continue to be preferred for larger purchases, providing additional consumer protections.
Consumers are increasingly exploring alternative payment methods for bigger transactions, including gift vouchers, PayPal, and Buy Now Pay Later.
Retailers have long criticised the high cost of processing card payments. Although total card fees fell slightly in 2024, they reached £1.48 billion, more than double the level in 2019. In April, the Payments System Regulator proposed measures to increase transparency in merchant and acquirer fees, but the BRC argues this is insufficient.
The organisation is calling for:
- Long-term price caps on card fees to reduce scheme and processing costs.
- A Commercial Cards Market Review to examine interchange fees and ensure effective market functioning.
- Expansion of Open Banking as a fairer alternative to card payments.
Chris Owen, Payments Policy Advisor at the BRC, commented:
"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."
The survey underscores a clear trend: consumers are increasingly cost-conscious, reshaping payment patterns and pressuring retailers to navigate rising processing costs while offering flexible, affordable options.
More information:
BRC
[email protected]
www.brc.org.uk
