UK retailers call on lawmakers to rein in card issuers charging “excessive” fees

The British Retail Consortium (BRC) has called on lawmakers to clamp down on the credit card industry and “protect British businesses and consumers from spiralling costs”.

The fees charged by payment companies have more than doubled in the last two years, with retailers forced to pass on the extra costs to consumers – leading to credit card bills rising by another £40 a year, according to the trade association.

“It is vital that the government takes action to tackle excessive card costs,” said Andrew Cregan, said Andrew Cregan, head of finance policy at the BRC.

The claims are part of the BRC’s latest Payments Survey (2021), an annual publication of BRC measuring the sales volumes and values of different payment channels employed by retailers across the UK.

Visa and Mastercard “abuse” dominant market position

Cregan singled out Visa and Mastercard, by claiming they the pair abuse their dominant market position within the payments sector.

“It’s an abuse of a dominant market position by these companies,” he told the BBC. “They’re two of the most profitable organisations in the world and they’ve got merchants over a barrel.”

The overwhelming trend towards card payments in recent years has meant retailers incurred costs of more than £1bn just to accept these payments from customers in 2020.

Debit cards, which accounted for over half of all transactions (54 percent) for the first time, have seen transaction fees rise by 22 percent (to 7.2p per transaction).

Amidst a backdrop of mounting costs due to the pandemic and Brexit higher card fees add further cost pressure on retailers.

In fact, these costs are equivalent to £40 per household, per year, and will translate into higher prices for consumers, the BRC said.

Retail and hospitality trade bodies have come together to call for action to tackle card fees, as more of them have been forced to accept card only payments due to the pandemic and social distancing rules.

“With card payments accounting for almost 80 percent of retail sales, it is vital that the government takes action to tackle the soaring costs that card companies charge retailers,” Cregan added. “Without action we will see businesses put under further pressure and it will be consumers who are forced to pay the price.”

Card issuers question BRC’s findings

Card issuers have rejected the BRC’s findings, asserting that retailers are paying less than five years ago.

“Visa enables millions of merchants throughout the UK to access the benefits of digital payments, giving them the ability to reach billions of potential customers both in their local communities and across the globe,” according to a Visa spokesperson.

“Visa has delivered to UK consumers some of the most secure and innovative payments solutions available anywhere in the world.”

Meanwhile, Mastercard said the BRC’s findings do not represent the facts of the UK payments industry.

“The UK benefits from a highly competitive payments system designed for ease, simplicity and security for all those who make or receive a payment,” a Mastercard spokesperson said.

“Digital payments are the most effective way of receiving and making payments for business and by their nature are significantly less costly than cash.”

Conducted by the BRC for over twenty years, the Payments Survey utilises an exclusive set of data from retailers to assess the changing approaches in the ways that customers choose to pay for goods.

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