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Costs of payment collection at point of sale in UK: cash is cheapest and is, on average, 24 times ch

The British Retail Consortium (BRC) has been conducting their annual Cost of Payment Collection Survey, since 1999, of their members' costs of payment collection to provide participant members with key benchmarking figures and to lobby the authorities, e.g. cash, on average, is 24 times cheaper than credit card payments. The main cost comparisons from the 2011 survey are:

  • cash accounts for 58.27% of transactions - yet just accounts for 11.12% of costs
  • debit cards account for 29.1% of transactions - and account for 36% of costs
  • credit and charge cards account for only 10.98% of transactions - but account for a staggering (BRC's description) 51.14% of costs
  • the cost of Merchant Service Charge (MSC) has been rising
    • since 2007 the card merchant service costs for debit cards have risen by over 27% and now account for 0.31% of debit card turnover
    • average MSC on credit and charge cards has risen to 0.95% of turnover compared to 0.91% in 2010.
    • MSC account for circa 97% of the total cost incurred in the acceptance of any type of card by retailers.

BRC argue that given these figures: "It is the interchange cost element within the MSC that has, in the recent MasterCard decision by the European Commission backed by the European Court, been deemed to be anti-competitve and illegal. The UK market currently awaits similar action and ruling by the OFT as interchange equates to more than 90% of the total card MSC retailers pay."

The BRC's assessment of the costs of collection of each payment system at POS in 2011 are:

Source & Copyright©2012 - British Retail Consortium

Although cash is the cheapest to collect, the average value of a cash transaction is only £10.45, so clearly payment cards and cheques are needed for higher value transactions:

Source & Copyright©2012 - British Retail Consortium

The survey also showed that:


  • the average time taken to process a cash transaction at point of sale is 27 seconds (2010: 27.2 seconds) compared to 36 seconds (2010: 39 seconds) for handling a card payment
  • circa 30% of manned tills now have the capability to accept contactless cards.

 Payment card systems are becoming faster - note the three second reduction in card transaction time in BRC's 2011 figures - and with embedded contactless technology, they are much faster, often faster than cash. No wonder the BRC is vigorously campaigning for a reduction in Interchange on payment card transactions. It is not just today's injustice that is motivating them, but also when (not 'if') many of their members' cheap cash transactions are replaced by contactless card transactions, the costs will rise significantly... unless they can get the payment card charges reduced.

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