Card payments rocketed during the pandemic with no sight of slowing down.
According to figures from the British Retail Consortium (BRC), card payments account for four of every five payments made.
But as consumers switch, the soaring cost of accepting card payments is hitting retailers and adding to business costs.
According to the Institute of Chartered Accountants in England and Wales (ICAEW), in October last year, Visa and Mastercard raised their cross-border interchange fees on purchases made by UK consumers to European businesses from 0.2% to 1.15% for debit cards and 0.3% to 1.5% for credit card transactions.
Move to improve services
Meanwhile, transaction fees on digital wallets are also rising. In November 2021, PayPal increased fees for payments between businesses in the UK and Europe from 0.5% to 1.29%.
Following the Payments System Regulator (PSR) review, the Government watchdog announced new rules in October for helping businesses switch to more cost-effective services.
From January 2023, card-acquiring service providers must remind businesses at the end of their contract term that they should compare prices to get a better deal.
In addition:
- Providers must provide information to businesses about their charges and give an initial online quotation tool for main fees to help business owners make a choice
- Following concerns that businesses are locked into lengthy contracts for card readers, the regulator is limiting point-of-sale (POS) terminal contracts to 18 months
