Retailers are concerned “unjustifiably”
high fees on credit and debit card sales will become the norm for
emerging contactless and mobile phone payment methods, according to
the British Retail Consortium (BRC).
BRC director general Stephen Robertson has
argued that as payment technology develops card charges should be
going down, not up.
“There is no justification for such big
differences in charges between cards and cash,” said Robertson.
“‘Contactless’ systems can bring benefits but banks are currently
levying charges on card payments well beyond what it actually costs
to process these transactions. They can’t expect to maintain these
excessive charges as numbers of non-cash payments grow.”
A survey from the BRC shows accepting
payment by debit card costs a retailer four times more than when a
customer uses cash. In addition bank’s charges for handling debit
card payments have almost doubled in five years.
An average cash transaction costs retailers
2.1 pence; a debit card payment costs 8.5 pence, and a credit card
payment costs 34 pence. The BRC claim that if charges for every
payment method were as low as they are for cash, its members could
pass on £480 million in cost savings to their customers.
“Some innovative banks around the world are
already starting to break down these fees into their component
costs, enabling a greater level of transparency and allowing
merchants to see exactly what they are paying for each part of the
service,” said Paul Love, business solutions consultant at ACI
“Those acquiring banks that can improve the
level of transparency around fees and charges for their merchants
will ensure that both parties are better placed to engage in
reasonable negotiations to get what both parties feel is a fair
deal on overall the merchant service charge. This can only
strengthen the relationship between acquiring banks and the
merchants who will ultimately have more visibility of the added
value that an acquirer provides, ensuring the bank’s continued
prosperity in the global acquiring industry.”
Cash is the preferred method of spending
according to the survey, amounting for 58 percent of all
transactions. This is up on 56 percent in 2008 but down on 61
percent in 2007.
“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,” added Robertson.
The BRC’s annual Cost of Collection Survey
includes results from over seven billion transactions in 21,500
shops of all types.