foul
Banks have come under heavy fire from the UK’s largest retail
industry body, the British Retail Consortium (BRC), which accuses
them of exaggerating the extent to which cards have replaced cash,
while pushing cashless payment methods as a way of further boosting
their own revenue. “Banks have long abused their position by
imposing much higher charges on retailers for processing card
payments than cash,” said the BRC’s director general, Kevin
Hawkins. “Clearly the banks have spotted that replacing cash with
cards would mean a further boost to their profits.”
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He continued that retailers are not opposed in principle to cards
taking a bigger share of the payments market but, as they try to
accelerate that process, the banks should acknowledge their card
charges are too high. “There should be a lower, fixed fee per
transaction which actually reflects the costs of processing,” said
Hawkins. “Cash still dominates and will continue to do so while the
high costs of the alternatives put retailers off adopting
them.”
Peter Robinson, commercial manager, payments at DSG International,
one of Europe’s largest consumer electronics retailers and chairman
of the BRC’s Payments Working Group, said: “Cash is still king for
customers. Coincidentally, and despite the costs of transporting
and banking cash, it is also the cheapest means of payment for most
retailers.”
Robinson was backed by data from the BRC’s latest Cost of
Collection survey that includes results from 10,000 shops
responsible for over one-third of total UK retail sales. It shows
cash is still the most popular payment method, accounting for 54
percent of all transactions. In value terms, cash accounted for £32
($67) of every £100 spent in shops.
The BRC believes that processing costs of credit card payments
borne by retailers is particularly excessive. On average, according
to the BRC, a £20 cash transaction costs a retailer less than £0.04
while a £20 credit card transaction costs at least £0.17. The
result in 2006 was that of the £317 million total cost of
collecting all payments, including cash, cards and cheques, credit
card payments made up 51 percent even though they represented only
22 percent of sales turnover and 12 percent of transactions.
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By GlobalData“If the banks are serious about getting customers and retailers to
switch from cash, the alternatives need to be cheaper and widely
accepted,” stressed Robinson. “Contactless cards, which banks are
calling the new alternative to cash, do not yet meet these
requirements.”
The BRC called on the government’s Office of Fair Trading to
“finally end this anti-competitive behaviour in the UK and force
the banks to reduce their charges”.
European support
Calls similar to that of the BRC are being made across Europe for
the European Commission to force Visa and MasterCard to lower fees.
The most recent came in November from CEOs of 14 retailers that in
total serve 250 million customers a week. The CEOs said success of
the Single Euro Payments Area “depends on the EC taking action to
end MasterCard and Visa’s price-fixing”. They warned that if card
companies were allowed to continue the existing “secretive and
excessive charging regime”, SEPA could fail because the potential
benefits to customers and businesses will be lost.
