Retailers hit hard by card transactions

PUNITIVE handling fees mean that accepting payment by card rather than in cash can cost a retailer up to 16 times more, according to the annual Cost of Collection Survey from the British Retail Consortium (BRC), which is published today.

The survey, which covers 53 per cent of total UK retail sales in 2009 and is based on more than 7bn transactions, showed that an average cash payment costs retailers 2.1p whereas using a debit card costs 8.5p. A credit card payment incurs a fee of 34p.

Almost half of the total payment collection fees paid by retailers is spent on acceptance of credit cards, despite this method of payment only representing 11 per cent of all transactions.

As a result of this the BRC is urging the government to intervene and cut the excessive charges that banks levy on retailers for accepting plastic.

Stephen Robertson, director-general of the BRC, said: “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.”

He added: “In the end it is 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.”

Cash is still the most popular form of payment and was used in 58 per cent of all transactions last year compared to 55.7 per cent in 2008 and 60.1 per cent in 2007. But the BRC’s Stephen Robertson said that the long-term trend is for cash use to fall: “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.”

However, in terms of the value of the payment, debit cards are the most popular, accounting for 44 per cent of UK retail sales value. The average debit card transaction value is £31.45 compared to the average cash transaction of £11.43.

Credit cards made up 20.6 per cent of turnover while cash was 32.2 per cent. The use of cheques remained steady at 0.1 per cent of transactions.