Cash no longer king, but £1.3 billion cost of digital transactions hits UK retailers
Covid-19 was no friend to cash. The pandemic saw retail transactions via payment cards rocket in 2020, according to the British Retail Consortium (BRC).
The body’s latest annual Payments Survey reveals debit and credit card transactions surpassed four in every five pounds spent in 2020 (81%, up from 78% in 2019). Cash now accounts for just 15% of total spending in retail, down from 20% in 2019.
But that has also meant retailers incurred costs of £1.3 billion to accept electronic customer payments last year. Debit cards, which accounted for 54% of all transactions for the first time, have seen related fees rise 22%, to 7.2 pence per transaction.
“Amidst a backdrop of mounting costs from Covid, Brexit, global supply chain disruption and rising commodity prices, these excessive card fees add further cost pressures to retailers”, said the BRC. “Equivalent to £46 per household per year, these additional costs can translate into higher prices for consumers”.
Meanwhile, the pandemic has also changed the way we shop with consumers making fewer, but bigger shopping trips. While the number of transactions fell by 13% (from 19.1 billion in 2019 to 16.7 billion in 2020), consumers spent on average 20% more per transaction. That meant the average transaction value increased from £20.16 in 2019 to £24.15 in 2020.
Andrew Cregan, Payments Policy Advisor, British Retail Consortium said: “Despite the general movement to card payments, retailers are being punished through the soaring cost of accepting such payments. Parliament needs to urgently intervene in this anti-competitive behaviour by regulating card scheme fees and abolishing interchange fees, both of which ultimately hurt consumers. Card firms are abusing their dominant market position, and this must come to an end.”
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