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Cash makes a comeback as usage rises for first time in a decade

cash withdrawals
cash withdrawals

The use of cash has increased for the first time in a decade as households look to balance their budgets amid the cost of living squeeze.

Coins and banknotes accounted for nearly a fifth of transactions in 2022, according to the British Retail Consortium (BRC)’s annual Payments Survey.

Its report said: “This year’s Payments Survey shows an increase in cash usage for the first time in a decade, up from 15pc (in 2021) to just under 19pc 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 pandemic, the report said.

It is the first time since the BRC’s reports started in 2013 that cash usage has increased year-on-year.

However, the group said the usage of cash in shops was still “fairly minimal” with only £11 in every £100 spent using cash.

“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 76pc of transactions in 2022, with debit cards accounting for around four in five of these transactions.

Alternative payment methods, such as buy now, pay later, also increased in popularity in 2022, rising from 2pc of transactions in 2021 to 5pc in 2022.

People have also been making smaller but more frequent payments as they manage their budgets.

The number of transactions increased from 17.2 billion in 2021 – 47.2 million per day – to 19.6 billion in 2022, or 53.7 million per day. The average transaction value fell from £24.49 to £22.43.

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.”