Representatives of retailers, small businesses and hospitality across the UK have joined forces to call for ‘decisive action’ against the ever-increasing price of credit and debit card transactions.
In its latest payments survey—recently covered on this site—the British Retail Consortium showed card use has risen from 54 percent of transactions in 2016 to 61 percent in 2019. The cost to retailers of accepting such payments has also risen, reaching £950 million in 2019. This represents the vast majority of the overall cost of accepting payments: £1.1 billion.
In 2019, the average transaction cost—meaning retailer expenditure incurred in accepting payments—was 1.42 pence for cash, 5.88 pence for debit cards, and 18.4 percent for credit and charge cards. This makes cash a far more cost-effective option for retailers, and it offers the added benefit of not being controlled by the private sector, which is naturally motivated to increase its profit margins wherever possible, leading to higher costs.
On top of existing fees, new costs have also been introduced in the past year, with retailers now being charged to accept payments online. The BRC says the overall increase in scheme fees—some 56 percent in 2018, measured as a percentage of turnover—provides “clear demonstrations of an abuse of market dominance.”
The BRC joined the British Independent Retailers Association, the Association of Convenience Stores, the Federation of Small Business, and UKHospitality in calling for action from the Competition and Markets Authority to tackle these growing fees.
It is vital the Government takes action to tackle excessive card costs. Without action, we will see businesses put under further pressure and it will be consumers who are forced to pay the price.