Interchange fees for handling debit and credit card payments cost the retail industry almost £1bn in 2013, the British Retail Consortium’s (BRC) latest survey has found.
The BRC’s Payments Survey 2013, published today, found the average cost to a retailer to process a credit or charge card payment last year was 40.9p, up 18.3% in five years.
Credit and charge cards account for only 9% of transactions, but almost half of the costs retailers have to meet to handle all payments. By comparison, cash accounts for 53% of all transactions but only represents 9% of the costs.
Helen Dickinson, director general of the BRC, said the survey showed banks were still levying “unjustifiably high charges” on retailers for handling card payments.
“It is really disappointing that the average cost of accepting both credit and debit cards has increased over five years, while cash costs have gone down,” she said. “Interchange fees cost the retail industry and its customers almost £1bn in 2013.”
In April, the BRC welcomed a vote by MEPs in the European Parliament for an overhaul of the European payments market, which will cap the fees retailers’ pay banks to process card payments.
Dickinson said these proposals were close to final approval, adding: “In the meantime, we continue to work with the government and payment system regulator to implement caps on UK fees without further delay, as has happened in other European countries.”
The annual survey also revealed that customers are spending the same amount in total on their credit cards, but on fewer items. The BRC said this suggested customers were making more considered purchases.
“The recent pattern of spending on larger but fewer products on credit cards shows that customers are now feeling more confident than they did a year ago and reflects the wider consumer outlook of cautious growth,” said Dickinson.
Cash payments continued to decline in popularity in 2013 due to the increasing availability of contactless cards, express stores and self-service tills, as well as online sales.
Cash is still the dominant method of payment, accounting for 53% of transactions, but this declined by 3% over the course of 2013 and 10% over a five-year period.
Over the last five years, the average transaction value for cash has declined by 17%, from £11.43 in 2009 to £9.47 in 2013.
Debit cards now account for 50% of sales turnover, up 2% year-on-year, and 32% of transactions.
“Customers are taking advantages of new ways to shop and pay,” said Dickinson. “This is very much in line with the attention customers have paid to price.
“It shows that customers are embracing digital shopping whether online or on the high street and retailers are adapting and evolving to meet the demand with excellent services.”