Brexit will result in British retailers paying more to accept foreign issued cards and will increase the costs for business in the future.
British Retail Consortium (BRC) launches its latest Payment Survey which shows that credit card spending overtook cash spending in 2018. Debit cards remain the most popular method of payment, accounting for almost three-in-five transactions.
The use of cash payments has been falling steadily. Over the past five years cash use has dropped from over half of all transactions in 2013 to under 40% in 2018. The value of those cash transactions has fallen from 28% to 20% during the same period.
Nonetheless, cash remains an important part of retail, particularly for many vulnerable people, and the BRC is working to ensure the long-term viability of ATMs and reduce barriers that prevent many businesses from offering cashback to customers.
Total UK retail sales rose by 4.1% to £381 billion, from £366 billion the previous year. There were 20.1 billion transactions in a single year (more than 55 million transaction a day) up from 19.8 billion in 2017.
Card costs continue to rise as retailers spent £1.3 billion with third parties, up £70 million from 2017. Each transaction cost retailers an average of 5.85 pence per transaction, up 17% (from 4.98 pence).
These additional costs are largely driven by the fees paid by businesses to credit and debit card companies, that increased by over 50% in 2018. The BRC are calling for action to improve regulation of card payment fees, expanding and simplifying the regulation to cover the full range of transactions and prevent abuse by card companies.
Andrew Cregan, Policy Advisor Payments and Consumer Credit, said:
“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. Without action we will see businesses put under further pressure and it will be consumers who are forced to pay the price.”
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