Banks accused of charging retailers ‘excessive’ card fees

Retailers are calling for action over what they say are “excessive” fees charged by credit and debit card providers in the UK.

Card use rose steadily from 54% of transactions in 2016 to 61% in 2019 and Covid-19 has accelerated this trend as more customers shopped online or paid by card in store, the British Retail Consortium (BRC) said.

Meanwhile, the cost to retailers of accepting payments reached £1.1bn in 2019, of which £950m was from card payments. Shops are charged an average of 18.4p per credit card transaction (up 15% from 2016), and 5.9p for every debit card transaction (up 6% from 2016). On top of this, businesses have received notices in the past year of new fees that will be charged to accept payments online.

These increasing fees are putting further pressure on retailers at a time when they are already facing higher costs due to coronavirus and Brexit. Ultimately these costs, equivalent to £40 per household, will be reflected in consumer prices, the BRC said.

The trade body has joined forces with the British Independent Retailers Association, Association of Convenience Stores, Federation of Small Businesses and UKHospitality to call for “decisive action” to tackle increasing card fees.

“With card payments accounting for almost 80% of retail sales, it is vital that the Government takes action to tackle excessive card costs,” said Andrew Cregan, head of Finance Policy at the BRC. “Without action we will see businesses put under further pressure and it will be consumers who are forced to pay the price.”

James Lowman, chief executive of the Association of Convenience Stores, added: “The way that customers pay in convenience stores is continuing to diversify and the costs that must be met by retailers to provide these options are rising. Recent years have seen the financing of ATMs undermined, causing many machines to become fee-charging regardless of retailer preferences, and some parts of card fees double for retailers.

“There are two priorities for retailers here: everyone would benefit from a restored national network supplying access to cash, and action is needed to allow retailers to effectively find the best deal and switch card payments providers.”