The British Retail Consortium introduced new figures that show the average credit card transaction costs retailers a stunning 34p compared to the 2.1p for cash transactions and 8.5p for debit transactions.
The BRC stated that card payments accounted for almost 77% of all retail spending in 2009. It added that its members would save up to £480m per year if credit card processing fees were the same as cash.
At the same time, figures from the UK Cards Authority, Office for National Statistics, and BRC show that charges paid by retailers for the average adult’s purchases by credit card come out to about £185 per adult every year.
BRC member Stephen Robertson stated that there is no reason to have such large differences in the transaction costs of cash and cards. With the technology that fuels card payments continuing to develop and grow it only makes sense that card charges should be decreasing, not increasing.
However, a spokeswoman for the UKCA stated that the card issuers would not be able to break down profits and costs on transactions because they do not carry this type of data but she added that the card issuers do cover large costs on the side, such as fraud protection and interest free periods.
Transaction fees that occur from card use originate from two locations, the retailer’s service charge issued on every sale and the interchange fee that is charged by the card issuer. The last part is fixed at .75% of all sales by the UKCA.