Cash becomes king amid credit crunch

Britons are increasingly turning to cash over payments cards as the UK faces economic gloom.

Data from British Retail Consortium (BRC) reveals cash is currently used on 60 per cent of transactions, a marked increase from the 54 per cent share the payment method saw this time last year.

And in terms of value cash makes up 34 per cent of purchases, up from 32 per cent 12 months ago.

BRC director general believes restricted consumer confidence is responsible for the shift, with customers feeling it more important they keep a tighter control over their finances.

"Reports of the death of cash are premature," Mr Robertson said.

"Hard-up customers are increasingly reluctant to spend money they haven't actually got in their hands…. While total retail spending continues to grow, there is a widening gap between the amount spent in cash and the amount spent using cards."

The economic situation is having an impact but card companies and banks are also accused of furthering cashless payment methods to boost their revenues, the BRC claims.

It says the charges levied on processing cards – 34p for a single credit card transaction – are inevitably being passed on to unaware consumers.

"Banks should not be exploiting new payment systems as a way of taking extra money from shoppers," Mr Robertson added.

"There should be a lower fixed fee per transaction which actually reflects the cost of processing, so new technology