Figures just released find retailers could be paying much more to process cards than cash
Figures just released find retailers could be paying much more to process cards than cash
Figures released this week from the British Retail Consortium's annual payments survey have showed that accepting a payment by debit card costs a retailer four times more than when a customer uses cash.
The statistics also showed that an average cash transaction costs retailers 2.1 pence, compared to 8.5p for debit cards and a whopping 34p for credit card purchases.
Venda, an e-commerce software provider, has suggested that the Government needs to intercept and demand that banks stop charging such ridiculously high amounts from credit card transactions.
James Cronin, chief information of Venda, which processes 1 in every 50 of all non-food UK e-commerce transactions, said: “UK retailers have been hit hard by the recent turbulent economic times and the government needs to do everything possible to ensure the it can bounce back. Right now, one of the most pressing issues is the ludicrous charge that banks are unfairly demanding for processing credit card transactions online.
Calling on government action
“With an estimated £480 million in cost savings in the balance, the government must intervene to stop the high card charges which are a financial burden for retailers. Banks have spent the last three years up-selling ‘premium cards’ with ‘premium services’ to now decide that they are going to pass more cost burden to retailers.”
Cronin added: “As online shopping and m-commerce [mobile e-commerce] become increasingly popular, reflected by the 80% average year-on-year growth across our retailers in Q4 [the fourth quarter of 2009], so does the use of credit and debit cards for transactions. The high charges will continue to cripple retailers until banks act appropriately and lessen the processing fees, allowing retailers to pass on significant cost savings to customers with lower and more competitive price points. This move is critical to give a much-needed kick-start to the retail economy.”
British Retail Consortium director general, Stephen Robertson, added: "There is no justification for such big differences in charges between cards and cash. With payment technology and efficiency developing, card charges should be going down not up. ‘contactless' systems can bring benefits but banks are currently levying charges on card payments well beyond what it actually costs them to process those transactions. They can't expect to maintain those excessive charges as numbers of non-cash payments grow.
“In the end it's customers who meet these unfair costs in the prices they pay. Banks must reduce their charges to reflect more honestly the costs they actually incur in processing transactions."
But cash is still king
The latest BRC survey also showed cash holding its own as the favourite way of paying, but in slight decline compared with recent years. Cash was used for 58% of all transactions. That is up on 56% in 2008 but down on 61% in 2007. In terms of money spent, 32% of all retail spending was done with cash in 2009. That was virtually unchanged from 33% in 2008 and slightly less than 34% in 2007.
Robertson added: "Cash is still the most popular way of paying and the cheapest for retailers. Cash use had a boost in the recession. Many people find managing their spending easier with cash – you can't spend what you haven't got. But the longer term trend suggests cash use will slip gradually."
