The way shoppers paid for goods continued to shift in 2024, with credit card usage seeing a marked decline and consumers favouring debit cards and emerging alternative payment options, according to the British Retail Consortium’s latest Payments Survey.
The annual review shows credit cards accounted for 12.6 per cent of all retail transactions in 2024, down from 14.2 per cent the previous year, as high interest rates made borrowing on plastic increasingly unattractive.
Debit cards strengthened their position as the dominant payment method, rising from 62 per cent to 64 per cent of transactions.
The BRC notes that consumers facing persistently elevated living costs were opting for “lower-interest forms of payment”, including Buy Now Pay Later (BNPL) products, PayPal and gift vouchers.
Despite the shift away from credit, cards still underpin the majority of retail spending. Together, debit and credit cards made up 84.2 per cent of sales turnover in 2024, although this is slightly down from 85.7 per cent in 2023, the survey confirms.
Shoppers make fewer but larger purchases
The total number of transactions across all payment methods fell from 20.95 billion to 20.42 billion, reversing several years of increases.
Average transaction values rose across the board, reaching £22.90, up from £22.03, suggesting a partial return to the traditional weekly shop after years of smaller, more frequent top-ups driven by economic pressure.
Cash use continues to decline, but remains vital
Cash’s share of transactions dipped only slightly, from 19.9 per cent to 19.2 per cent, although its share of total sales value fell to 10.8 per cent.
The BRC emphasised that cash remains essential for many customers, including vulnerable groups and the UK’s 900,000 unbanked adults identified by the FCA in 2024 .
However, the report notes ongoing challenges around access to cash, with the number of ATMs falling by nearly 7 per cent in 2024.
Retailers still burdened by high card fees
Although the overall cost of processing card payments fell slightly last year – from £1.64 billion to £1.48 billion – retailers are still paying more than double the amount they did in 2019. The BRC attributed the marginal drop to lower transaction volumes and greater use of alternative payment types, but stressed that fees remain “significantly and unjustifiably high”.
2024 marked the second highest year of fees since the survey began in 2013, and the fourth consecutive year since 2021 that fees have exceeded £1 billion.
Average transaction costs in pence remain high for both debit and credit cards transactions, increasing from 0.06p in 2023 to 0.07p in 2024 for debit cards but falling from 0.18p in 2023 to 0.16p for credit cards. Average transaction costs as a percentage of sales also remained high at 0.3 per cent for debit cards and 0.5 per cent for credit cards.
Interchange fees for commercial cards rose again, up 2.9 per cent per transaction, prompting the BRC to call for a dedicated regulatory review of commercial card pricing. While some reductions in scheme fees were recorded, charges for credit cards increased in several areas.
BRC: Only a long-term price cap will fix the system
Chris Owen, payments policy advisor at the BRC, said the continued dominance of cards, combined with fee levels that have more than doubled in six years, left retailers with little choice but to absorb rising processing costs.
“As interest rates peaked in 2024, the use of credit cards fell as customers switched to lower interest forms of payment,” Owen said.
“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 BRC repeated its long-standing demand for meaningful reform of card fees, including:
- A long-term price cap on scheme and processing fees
- A full market review into commercial card interchange fees
- Acceleration of open banking to provide a viable, lower-cost alternative to cards, including its adoption at the point of sale
The BRC report highlights that open banking remains promising but incomplete, requiring lower costs, improved functionality and stronger consumer protections before it can compete with card schemes at scale.