The British Retail Consortium (BRC) has this month, released its Payment Survey 2022 report which highlights that card payments now account for 90 per cent of retail transactions in the UK, leading the BRC to call on the UK watchdog, Payments Systems Regulator (PSR) for urgent support as the "rising cost of using cards is a huge concern for the retail industry".
The findings from the British Retail Consortium’s (BRC) 2022 Payments Survey reveal that Debit Cards have continued to gain ground as the preferred payment method in the U.K, accounting for nearly 67% of all retail transactions in 2021, with Credit Cards also rising to 22.7%, whilst cash transactions fell to it’s lowest level at 8.23%.
Aided by the increase to £100 for contactless payments, cards have become overwhelmingly the preferred method of payment for the vast majority of transactions and were used to purchase £377.9 billion worth of goods, across 14.1 billion transactions, accounting for 89.7% of retail sales in 2021.
Whilst the above figures will be music to the ears of the card schemes, especially when you consider that Mastercard and Visa account for 99% of debit and credit card payments in the UK; the BRC has now called upon the PSR for urgent support against what is calls the "Card Tax".
Hannah Regan, payments policy advisor at the BRC British Retail Consortium said: “With the public in and out of lockdown and cash usage discouraged last year (2020), over 90 per cent of retail spending used debit or credit card.
She continued “With card usage soaring, already hard-pressed retailers had to pay huge sums to accept these payments. We need urgent intervention from the Payments Systems Regulator and the Treasury to stop card schemes from abusing their dominant market position.”
To be fair The Payment Systems Regulator did announce on 27th October 2022 that they are set to launch two separate market reviews of the fees charged by Visa and Mastercard - one looking at scheme and processing fees and the other at cross-border interchange fees.
The UK watchdog commented that they had "been gathering information since the start of 2022 and have identified that a detailed review of the market is needed." To ensure "card payments are working well and to make sure that merchants, and ultimately consumers, get a good deal.", whilst also wanting to understand the rationale being recent price hikes from the card schemes.
Chris Hemsley, managing director at the PSR really stated: “Cards are the most popular way for people to make payments in the UK, but the concerns we have heard indicate that businesses could be paying over the odds by the fees imposed by Visa and Mastercard. "We are moving as quickly as we can, but this is a complex issue to assess fully, and we want to make sure we take the right course of action - especially as it affects millions of businesses in the UK."
Steven Jones, Commercial Director at Fintech company Gala Technology commented "After two years of a global pandemic, where businesses were squeezed more than ever, followed by a cost-of-living crisis, any increase in payment processing will surely end up with the consumers, as businesses may have to pass on the increases.
For any organisations that would like to check whether there is a better deal out there in the market, I would like to inform them that Gala Technology offer a free payments review, where we can compare processing rates, service and settlement times, potentially introducing the latest payment technology such as Open Banking for Account2Account payments, as we look to improve efficiency and cost."
"Account2Account payment enquiries and adoption have risen dramatically in recent month and in my opinion it will only continue as businesses fight for survival and look to embrace cheaper ways of accepting cashless payments."