The British Retail Consortium (BRC) has called for a clampdown on card payment fees, as its latest Payment Survey revealed plastic now accounts for nearly 80% of retail purchases.
The survey found retailers spent £70m more accepting card payments last year compared to 2017. The average cost of a card transaction was 5.85p, a 17% rise on the previous year.
The additional costs are largely driven by the fees paid by businesses to credit and debit card companies; these increased by over 50% in 2018.
The massive hike has prompted the BRC to demand better regulation of card payment fees, expanding and simplifying the regulation to cover the full range of transactions and prevent abuse by card companies.
“With card payments accounting for almost 80% of retail sales, it is vital that the Government takes action to tackle the soaring costs that card companies charge retailers,” said BRC policy adviser Andrew Cregan said. “Without action we will see businesses put under further pressure and it will be consumers who are forced to pay the price.”
The survey also found debit cards remain the UK’s preferred payment method, accounting for almost three-in-five transactions and 56.8% of sales by value last year. Credit and charge cards came in second with 21.5%, while cash – still the most cost-effective way for retailers to be paid – made up 20.4%.
The use of cash payments has been falling steadily; in 2013 it accounted for 28% of sales by value and was used in over half of all transactions. That figure now stands at under 40%.
Nonetheless, cash remains an important part of retail – particularly for many vulnerable people. The BRC said it was working to ensure the long-term viability of ATMs and reduce barriers that prevent many businesses from offering cashback to customers.