The proportion of payments made using cash halved in 2021, compared with the previous year, according to figures from the British Retail Consortium (BRC).

In 2021, as stores closed for lockdowns and people increasingly turned to contactless payments, cash usage fell to just 15 per cent of all transactions – down from 30 per cent in 2020.

As a proportion of the total money spent, cash accounted for just 8 per cent of consumer spend last year, the BRC found.

More than four-fifths (82 per cent) of transactions last year were made using credit or debit cards, up from around two-thirds (67 per cent) in 2020, according to the BRC’s annual payments survey.

The proportion of payments made using cash halved in 2021, compared with the previous year, according to figures from the British Retail Consortium (BRC).

As well as the popularity of contactless spending, the rise in card payments is also partly due to an increase in online shopping in 2021.

Last year, 48.6 per cent of non-food items were purchased online, the BRC said. This figure has since fallen to 39.9 per cent in the first 11 months of 2022, as more people have returned to the high street.

Hannah Regan, payments policy adviser, BRC, said: “With the public in and out of lockdown and cash usage discouraged last year, over 90 per cent of retail spending used debit or credit card.

"With card usage soaring, already hard-pressed retailers had to pay huge sums to accept these payments.

"We need urgent intervention from the Payments Systems Regulator and the Treasury to stop card schemes from abusing their dominant market position.”

Costs associated with card use payments also rose.

The BRC said retailers incurred costs of £1.3 billion to accept card payments from customers in 2021. Debit cards, which accounted for the majority of transactions, saw scheme fees rise by 28 per cent compared to 2020, and total Merchant Service charges increased by 12 per cent.

This translated into an additional £141 million in costs imposed by card firms onto retailers just to process debit card transactions.

The BRC, along with other business groups, has previously called for intervention on anti-competitive practices in card payments in order to protect British businesses.

The group also expressed concern that cash remains vital for many people, particularly vulnerable groups who do not have access to other payment methods.

Cash use plunged in 2021 as shoppers turned to cards, BRC finds