Consumer use of cash grew for the first time in a decade, making up 19% of all transactions, up from 15% in 2021, according to the British Retail Consortium (BRC) Payments Survey 2023.

The BRC says this highlights the fact that many households are using cash to budget more carefully during the cost-of-living crisis.

UK retail sales grew by 4.3% to £439.5bn in 2022, which was mainly due to “rising prices” resulting from “increased costs throughout the supply chain”.

The survey also showed the number of transactions increased from 17.2 million in 2021 to 19.6 billion in 2022.

The average transaction value declined from £24.49 to £22.43 as consumers made more regular but smaller purchases. 

Card payments made up 76% of transactions in 2022, with debit cards accounting for around 80%. 

Cards also accounted for 85% of money spent, with debit cards taking around 75% of this spending. 

The BRC said card payments can be a “significant cost to retailers”, with retailers spending £1.26bn on card processing fees in 2022. 

Alternative payment methods, such as open banking and buy now, pay later schemes, were also on the rise in 2022, making up 4.9% of transactions compared with 2% of transactions in 2021. 

The BRC is now asking for action to reduce costs for retailers, including reforms in the payment market, a treasury review and the growth of open banking.

BRC payments policy adviser Hannah Regan 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. 

“Unfortunately, what has not changed is the ever-increasing scale of fees paid by retailers in order to accept card payments.

“Though alternative payment methods could provide much-needed competition to the market, the dominance of card payments means it is essential that action is taken to prevent fees rising further.”