The British Retail Consortium will continue to campaign against what it sees as “pernicious” card fee increases, it said this week.
In its annual “Payments Survey” the BRC reveals that debit card payments overtook cash payments in terms of volume in the UK retail sector for the first time in 2016. Card payments have long outweighed cash by value.
The report says the BRC’s campaign on Interchange Fees has delivered big savings: “Investment in payments has been boosted by savings of around £500m for retailers and their customers from the EU Interchange Fee Regulation (IFR), introduced following a successful campaign by the BRC, which caps some of the fees for handling credit and debit card transactions.”
But, it adds, further regulatory action is needed on card fees: “Retailers still spent more than £1bn in 2016 to accept payments from customers and the cost of processing cards remains high, particularly for credit cards. The Government should act to guarantee the benefits of the Interchange Fee Regulation (IFR) after Britain leaves the EU, bring expensive commercial cards within scope of the legislation, and restore the monetary cap for debit card transactions. The Payment Systems Regulator should take a proactive approach in supporting the interests of all end-users and in addressing the recent surge in scheme fees and other charges for processing credit and debit cards.”
The survey found card transactions grew by 4.5 per cent in 2016 to almost 43 per cent of all retail transactions, overtaking cash transactions which saw a 5 per cent shrinkage in its share of retail purchases to account for 42 per cent.
Falling average transaction values (ATV) of card payments, both in debit and credit cards, shows that cards are increasingly displacing cash for lower value payments.
The BRC says card usage has been driven by a number of factors, mainly increasing use of contactless payments and the growing number of retailers that have invested in payment technology to accept cards, contactless payments, and new payment applications both online and in store.
“The bottom-line message for retailers is that if they are not contactless enabled they need to be,” commented James Pepper at Vista , the retail technology specialists.
Amongst the categories seeing the most notable increases in this year’s Payments Survey is the small but growing ‘Non Card Payments’ category which accounted for almost £8 billion of retail spending in 2016 – up from £6 billion in 2015.
This broad payments category exceeded 2 per cent of retail sales by value for the first time in 2016, driven by channels such as PayPal. This is happening as customers make an ever increasing number of purchases online, and third party coupons – as more retailers take partmobile wallet schemes that drive footfall through smart marketing.
E-commerce stood at almost 15 per cent the market in 2016, up from around 12.5 per cent the previous year (ONS). Cards account for the vast majority of transactions conducted online however retailers have invested in alternative online payment channels, and more retailers than ever accepting new payment applications in store.
Looking to the future and the possibility that more retailers might follow Walmart’s lead and try to challenge card fees by adopting non card payment methods, Pepper commented that the costs of investing in the wrong technology – a VHS Betamax equivalent – will deter retailers from taking radical steps over the next few years.
A lot of work still needs to be done on biometric solutions before they could be used by retailers to process transactions with customers in general, but for smaller groups of customers such as loyalty card holders biometrics could be adopted in the near future, he predicted.