Customers make the switch to cash and debit card payments to avoid spending money they haven't got, while "unjustifiably-high" bank charges continue to put the squeeze on retailers.
The BRC's annual payments survey revealed that the number of transactions made using credit cards fell by 13% between 2009 and 2010, while the proportion involving debit cards rose by 16% in the year. Cash was involved in a smaller proportion of transactions than a year earlier but accounted for a greater proportion of overall retail spending, as the average amount spent in each case increased 13% to £12.93.

It was no surprise that cash was found to be the quickest way to pay, taking an average 27.2 seconds compared with an average 39.4 seconds for a card payment.

The BRC also found that, thanks to investments in new technology, such as secure card readers and improved internet security, fraud losses fell by 37% in 2010 compared with the previous year.

However, the survey, which includes results from nearly eight billion instore and online transactions, also revealed that retailers paid a total of £659m in fees for payment processing and cash collection in 2010.

Despite the efficiency of electronic payment systems, the average charge for processing a credit card payment was 37.1p last year, compared with a debit card average of 9.2p.

While cash is used in 55% of transactions, it only makes up 11.5% of retailers' payments costs. Credit cards, however, are used in just 10% of transactions but account for 44.5% of retailers' costs. Meanwhile, debit cards are used in 34% of transactions and make up 37.5% of costs to retailers, according to the survey.

BRC director general Stephen Robertson said: "Unjustifiably-high payment charges are still being taken from retailers. The question is should this money be going into increasing banks' profits or to keeping shop prices down for customers? Reducing the charges banks impose so they genuinely reflect he actual costs involved in processing these transactions is the right answer."