Page last updated at 02:49 GMT, Monday, 21 April 2008 03:49 UK

Worried shoppers 'turn to cash'

Cash machine
The BRC said cash was "alive and thriving"

Worried shoppers are increasingly spending with cash instead of credit cards, a survey by the British Retail Consortium (BRC) has suggested.

A survey of 17,000 shops found cash was used for 60% of transactions last year - up from 54% in 2006 - and accounted for about a third of all money spent.

The BRC said it showed a reluctance by people trying to control their finances to spend money they did not have.

Director general Stephen Robertson said cash was "alive and thriving".

"Hard-up customers are increasingly reluctant to spend money they haven't actually got in their hands," he said.

There should be a lower fixed fee per [card] transaction which actually reflects the cost of processing
Stephen Robertson
British Retail Consortium
"While total retail spending continues to grow, there is a widening gap between the amount spent in cash and the amount spent using cards, suggesting customers want to keep tight control of their finances."

The BRC Cost of Collection report also argued debit and credit card companies should cut the amount they charge retailers.

It said a 20 transaction in cash cost the retailer around 4p, but a shopper paying by credit card would cost them more than four times that amount.

I use cash since card cloning became a problem
Dee, Watford

Mr Robertson said the charges were "unjustifiable" and cost customers because retailers were forced to pass them on.

"There should be a lower fixed fee per transaction which actually reflects the cost of processing, so new technology brings balanced benefits to retailers, consumers and banks," he added.

EU probe

The underlying charges for accepting the cards, levied on shops by card issuers, have been under regulatory scrutiny for a long time, both in the UK and in Europe.

Since 2000 the Office of Fair Trading (OFT) has been investigating the interchange fees imposed by Mastercard and Visa and is expected to rule shortly.

Last month the EU began an investigation into the charges made by Visa when a credit card user shops abroad, and last year Mastercard was criticised by the European Commission for charging cross-border fees on credit and debit card transactions.

The payments industry says the charges reflect the fact that payment to the retailer is guaranteed, even though the customer has not paid the credit card company yet.

EU probes cross-border Visa fees
26 Mar 08 |  Business
Mastercard gets EU fees warning
19 Dec 07 |  Business
Shops denounce credit card costs
24 Oct 07 |  Business
Debit card fee inquiry unveiled
09 Feb 07 |  Business
Card charges 'push up' EU prices
12 Apr 06 |  Business

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