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80% of British public want card payment fees slashed as the cost of living crisis hits businesses

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  • Four in five Brits want retailers to pay less in card fees, and put money back into the pockets of embattled British businesses.
  • 90% of those surveyed underestimated, or didn’t know, the financial impact that card fees are having on UK retailers, which was estimated to be £5bn in 2022.
  • The Axe the Card Tax campaign is calling on the Treasury to use the Spring Budget to clamp down on these hidden and unregulated fees.

New data published today shows that a majority of the UK public oppose the rising and unregulated costs British businesses face for simply accepting payments. With the cost of doing business at record levels, the report, published by the Axe The Card Tax campaign, urges the Government to clamp down on these hidden fees in the upcoming Budget.

The campaign coalition represents 240,000 businesses and includes major trade bodies.

The most egregious rises are scheme and processing fees, which the campaign estimates have increased by a staggering 600% since 2015. These fees, which are set unilaterally by card schemes, are estimated to cost British businesses nearly £2bn every year. 99% of card payments are made with Visa and Mastercard. Businesses have little option but to accept these hikes or risk not being able to use the card scheme network that makes up over 90% of payments in the UK. 

Data from the campaign coalition showed that 80% of consumers want businesses to keep more of the money they take, and for payment providers to reduce their fees. The data comes as a record number of shops went out of business in 2022, with nearly 50 a day shutting their doors for good.

Hannah Regan, Financial Policy Lead at the British Retail Consortium, said:

“The BRC have long campaigned for greater regulation of the costs associated with card payments. Retailers are facing turbulent times at the moment with inflation and rising energy bills increasing their costs; soaring card fees add yet another dimension to the ever-increasing pressure on the British retailers. 

“Our BRC Payments Survey showed that 90% of retail spending in 2021 was made on cards, so given the dominance of cards in the UK market, it is absolutely crucial that HMT take the time to assess if the market is working competitively, fairly, and if the regulation in place is fit for purpose. 

“In addition, we urge the PSR to freeze all fees to ensure they can conduct their reviews thoroughly and that the market cannot be taken advantage of during that time.”

The Federation of Independent Retailers National President Jason Birks said: 

“Since Covid, small retailers have come under increasing pressure to accept debit and credit cards as payments. However, many of the products purchased from our members’ stores are small ticket items.  Many members are, therefore, reluctant to incur the card processing fees. There are also concerns about the costs of setting up card terminals, rentals, and the card processing costs. The Fed exists to help make members money, save them money, and make business easier which is why we are pleased to support the Axe the Card Tax campaign.”

The campaign’s data also shows that 90% of those surveyed underestimated, or didn’t know, just how much card fees were costing UK retailers. In 2022 alone, the coalition estimates that hidden fees cost British businesses £5bn.    

Last year the Payments Systems Regulator (PSR) launched investigations into why fees have risen, including on payments made by visitors from the EU that rose fivefold last year. The British Retail Consortium estimates that this has cost British businesses an additional £36.5m a year. And earlier this year, the PSR published an update to their investigation detailing findings so far that showed Visa and Mastercard have a higher operating profit than Microsoft, Amazon or Apple. This includes dividend increases of over 350% since 2015, the same year scheme and processing fees started to rise to the level they are today.

The campaign is calling for the Treasury to initiate its own review to make sure that regulation works for businesses. This includes promoting healthier competition in the sector to allow innovative UK Fintech’s the chance to thrive – a change that would provide further support to retailers. 

Dom Hallas, Executive Director at Coadec, said: 

“Businesses are facing a range of difficulties at the moment, but the unchecked cost of card fees is something the Government can easily fix. The public agrees with us that Axing the Card Tax is the way to do this – reversing the huge, unchecked rise in fees that cost businesses billions every year. 

“Without a wholesale review and an overhaul of the regulation, British fintechs will continue to lag behind , despite their fairer, more affordable alternatives. If we fix this broken market, we can put more money into the back pockets of businesses and turbocharge exciting young start-ups.”

Association of Convenience Stores Chief Executive James Lowman said

“Convenience store retailers are committed to offering a diverse range of payment methods for customers, including card payments, but significant hikes in card transaction fees are putting unnecessary pressure on retailers who are facing increased costs in all areas of their businesses. We must ensure that the card acquiring market is fair for retailers and consumers, and does not unfairly target smaller businesses”.

Pat Phelan, UK MD and Chief Customer Officer at payment company GoCardless, said: 

“This Report confirms what we’ve been saying for years: cards levy a tax on the economy. We encourage merchants to explore other payment options such as account-to-account payments, especially as they continue to feel the squeeze in this cost of living crisis.” 

“We’ve seen businesses save thousands of pounds after switching from cards, in addition to lowering their incidence of fraud and boosting conversion rates. We urge the Government to champion alternatives like account-to-account payments so companies up and down the country have a true choice when it comes to how they collect their hard-earned money.”

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