New technology has transformed the way people pay for products on the high street and online, according to the BRC's Cost of Payment Collection Survey, which reported a 10% decrease in cash spending in the retail industry over 2012.
While paying with cash remains the most popular choice among customers, more and more are opting to use debit cards as well as newer methods such as PayPal when making a purchase. People also prefer to use debit cards over credit as pressure on finances and budgets increases.

The survey showed that while 54.4% of transactions are completed with cash, use is down 6.7% in terms of transaction numbers, and money spent is down almost 10%. It's the first time in 13 years that both measures have seen a decline.

Credit and charge card use was down by 3.4% as a percentage of transactions, while transactions made on debit cards were up 3.2%. Use of alternative payment methods more than doubled compared with 2011, driven by manufacturers' money-off coupons and the rapid growth of new ways to pay in-store and online.

The BRC also commented on the survey's revelation that banks are continuing to "levy unjustifiably high charges on retailers for handling card payments". The average cost to a retailer for the processing of a credit or charge card payment was 25 times higher than for cash - 38p versus 1.5p. While credit and charge cards account for only 10.6% of transactions, they account for more than half (50.1%) of costs, and total costs associated with these cards were up 7%, despite use being down on the previous year.

BRC's director general Helen Dickinson said: "New ways to pay and new ways to shop are shaping the retail landscape like never before. Changing customer preferences are driving the increase in debit card use - they're helping people to manage their money better and are a natural fit for online shopping and self-service checkouts.

"Cash is still the most popular way to pay, but our survey shows how rapidly alternative and emerging methods are gaining ground, with growth more than doubling on the previous year, albeit from a low base. These methods will be the 'ones to watch' in the future, and retailers are investing heavily to make sure their customers have choice and convenience in ways to pay, whether in-store, at home or on the move.

"Against a backdrop of greater retail efficiency and innovation, the one jarring note is that charges remain disproportionately high. They continue to rise even though credit card use has fallen. It beggars belief that retailers incur average charges of 38p per credit and charge card transaction, 25 times more than for cash.

"Retailers have been arguing this in court for more than a decade now, and a resolution to the case is long overdue. The right conclusion would reduce these excessive costs for retailers and support their ability to invest and innovate."