Despite the claims of some banks, research has shown consumers are continuing to use cash as the most popular method of payment during the current recession.

Figures released by the British Retail Consortium (BRC) today show cash is used in 56 per cent of all transactions and 33 per cent of all retail spending is done with actual money.

The BRC report also highlights the extra costs banks are imposing on retailers for processing card transactions.

An average cash transaction costs retailers two pence; a debit card payment costs eight pence, but they are charged 35 pence when a customer uses a credit card, the BRC reports.

The consortium claims that if charges for every payment method were as low as they are for cash, over £800 million in cost savings would be passed on to customers through lower shop prices.

With the current economic crisis, many retailers are struggling due to a fall in demand and the need to discount. Therefore the size of the payment charges are beginning to threaten the viability of some, the BRC claims.

BRC director general Stephen Robertson said in a statement: “Reports of the death of cash are greatly exaggerated. Despite the impression created by some banks, it’s the most popular way of paying and the cheapest for most retailers.

“But banks are pushing new cards and payment technologies hard. Not surprising when they stand to make so much more in charges. Despite the recession, they are looking to maximise their profits and protect their own interests at the expense of customers who ultimately meet these costs.

He added there should be a lower fixed fee per transaction which reflects the true cost of processing.

Today’s report shows the use of cash in all transactions fell from 60 per cent to 50 last year, while the total spending in retail outlets using cash remained virtually unchanged.