Use of Cash On The Rise

The Martec International Retail Fraud Study, a ground breaking new study with the largest ever sample of UK retailers, has found the amount of cash used by consumers increased by 4% last year to an estimated £121 billion* of UK retail sales.

 

Cash was used most prominently in the hospitality and leisure industry where cash accounted for 58% of all transactions, a 20% rise, and department stores at 50 % of sales, representing a 3% rise. This nationwide report took 600 man hours to complete working directly with 100 of the UK’s top retailers, including Tesco’s, John Lewis, Marks & Spencer’s and HMV, accounting for 42% of the entire UK retail market.

 

James Harris, Commercial Director at  Volumatic the UK’s leading manufacturer of intelligent cash handling equipment, said: “In the past few years we have seen various new mobile and contactless payment methods come onto the market yet people continue to use cash. Despite the many new payment methods that have flooded the market recently it is interesting to see the value of cash has increased by £121 billion of sales representing a massive chunk of the economy and signals that perhaps these new methods of payments are slower than expected on the uptake.”

 

Whilst cash accounted for a large portion of sales in hospitality and department stores it understandably was used more sparingly in large format stores and for home shopping accounting for 26% and 7% of all transactions respectively.

 

Frances Riseley, Martec’s deputy managing director, commented: “The fact that the value of cash being used increased last year, especially in hospitality and mass merchants, perhaps signals that as the recession starts to bite people are turning to cash as a better way to budget their finances. The high volume of cash transactions in the hospitality section would certainly vindicate that hypothesis as it would suggest consumers are setting a spend limit and only taking that cash out with them so they can’t be tempted to run up high debit or credit card bills.”

 

Cash remains a cost effective payment method for retailers who face bank charges of only 2.3p per cash transaction compared to 9.3p per debit card transaction and 33p per credit card transaction. New payment methods such as mobile and contactless incur bank charges of 5p per transaction.

 

James Harris continued: “These latest findings suggest to me that perhaps it is banks rather than consumers who are pushing the drive for new payment methods as they can benefit from the higher charges on electronic payments. Consumers, who are using more cash than ever before, are clearly not demanding new payment methods. Retailers can’t be keen either as the inflated cost of electronic payments comes out of their pockets. In turn this processing cost is passed on to the customer via increased prices so that retailers can maintain a healthy balance sheet. The fact of the matter is that cash presents a cost effective payment method for retailers and, if more cash was used instead of electronic payment methods, retailers could pass on savings to their customers.”

 

With cash still playing a prominent role in the market place cash handling systems remain a critical part of retailer’s loss prevention strategies. The Martec International Retail Fraud Study found that 49% of retailers used secure cash storage devices at point-of-sale, 48% use cash counters and 69% use forgery detection devices.

 

James Harris commented: “With cash accounting for more than a third of transactions it is critical for retailers to not overlook securing their cash in the midst of ensuring e-payments are conducted securely. The Retail Fraud Study shows promising signs of loss prevention becoming a priority for retailers and they can be assisted in their mission to reduce shrinkage with the adaptation of intelligent cash handling technology to safeguard their assets.”

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