Comment: Consumers rapidly moving away from using cash

Instead they are supposedly increasing their usage of credit and debit cards as well as adopting a plethora of new payment methods such as contactless and stored-value cards plus various mobile and email payment solutions.

As exciting as this might sound such a transition is patently not happening if you believe the recent results of the 'Retail Cost of Collection' survey for 2007 from the British Retail Consortium (BRC) which found that use of cash has increased to 60 per cent of all transactions and it predicts that this percentage will increase further during 2008.

On the high street, where the BRC reports that 34p in every £1 is still spent using cash, the consumer is also unaware of any extra costs associated with their chosen method of payment.

Yet online surcharges for choosing to use credit rather than debit cards are quite common, and the retailer passes on the extra costs that they incur. For those that choose to use pre-paid cards, or sadly for those that have no choice, a whole new range of additional fees have to be faced. Many of these card products have top-up and usage fees that add to the cost of buying online.

So there is no doubt that as the internet matures as a trading platform it will face these, and many other new challenges, including increased levels of online fraud and the economic worries of many consumers, both of which are prompting them to avoid using their credit cards online. Such changes will lead to increasing numbers of people using other secure forms of payment online.

The potential for these alternative payment methods has been highlighted by a recent survey in the US from Javelin Strategy & Research that found the credit crunch is forcing retailers to think again about the number of payment options they offer on their websites as they seek to reduce their reliance on credit cards that have to date been their main source of payment.

It found that 30 per cent of Americans are expected to turn to alternative payment methods by 2012 with email-based payment accounts such as PayPal enjoying the greatest growth in adoption with a predicted jump from five per cent to 11 per cent of share of online transactions. It also predicts that pre-paid and gift cards will account for five per cent of all online purchases, store-branded credit cards will increase their share to four per cent, and the likes of Bill Me Later will also experience rapid growth in adoption rates.

We are in no doubt that the emergence of these various payment methods suggests an exciting future for the triumvirate of retailers, consumers and banks but it would be very disappointing if their take-up of was thwarted in any way over the issue of consumer pricing.