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MSE News: Banks slammed over plastic charges
Former_MSE_Dan
Posts: 1,593 Forumite
in Credit cards
This is the discussion thread for the following MSE News Story:
"Shoppers could save £480m a year if banks stop high fees for retailers processing purchases made with plastic... "
Read the full story:
"Shoppers could save £480m a year if banks stop high fees for retailers processing purchases made with plastic... "
Read the full story:
Former MSE team member
0
Comments
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Am I misunderstanding this?Shoppers could save £480m a year if banks stop high fees for retailers processing purchases made with plastic.
British Retail Consortium (BRC) figures show that it costs a bank 2.1p when consumers use cash, whereas processing a debit card costs on average 8.5p and a credit card 34p.
The BRC calculates that if charges for debit and credit transactions were as low as they are for cash, shops could save £480m, which may then be passed on through lower shop prices.
With a promise from the Government of a bank shake-up in order for them to have more responsible standards, the high street is asking for a ban of the rip-off charges.
I wouldn't have thought it costs a bank anything when a customer buys something for cash in a shop.
Or are we talking about the shop's bank? But then, surely any costs are not related to the individual cash transactions?
:think:0 -
I'm agreeing with
"The UK Cards Association says it doesn't believe stores would pass on any reductions in processing charges to shoppers."
The BRC are bashing the banks in a press release to get them to lower their charges so the BRC's members can increase profits.I beep for Robins - Beep Beep
& Choo Choo for trains!!0 -
I don't get this either - I assumed this was the average per transaction cost to the retailer. However I can't believe the cash charges are so low - surely there are costs associated with banking the money, security, float etc which make taking cash just as costly for a retailer?Old_Wrinkly wrote: »Am I misunderstanding this?
I wouldn't have thought it costs a bank anything when a customer buys something for cash in a shop.
Or are we talking about the shop's bank? But then, surely any costs are not related to the individual cash transactions?
:think:I think....0 -
"The UK Cards Association says it doesn't believe stores would pass on any reductions in processing charges to shoppers."
Sure... but many smaller retailers (e.g. the butcher in the small town where I live) find it necessary to impose minimum transactions or fees for card use.
Such businesses are vital to retaining communities and preventing Tesco et al from wrecking UK retail even further (reducing choice and perpetuating the identikit high street) - if the banks' card charges were to come down, then the smaller retailers would no longer feel it necessary to impose such measures.
As for cash charges being low, I imagine that is because the retailer only banks cash occasionally (but that cash relates to mutliple transactions), compared with multiple card transactions.0 -
Old_Wrinkly wrote: »Am I misunderstanding this?
I wouldn't have thought it costs a bank anything when a customer buys something for cash in a shop.
Or are we talking about the shop's bank? But then, surely any costs are not related to the individual cash transactions?
:think:
cheers - that was a typo!
Former MSE team member0 -
The BRC are bashing the banks in a press release to get them to lower their charges so the BRC's members can increase profits.
Increasing profits isn't an altogether alien concept to banks.
Presumably you missed the bit in the piece that said ''transaction costs have doubled in five years''.0 -
8.5p for a debit card transaction.
Just goes to show that some of the independents charging a £1+ just for using a card are making a profit of over 90% for card transactions. Like my local Chinese. It makes me want to stick chopsticks in their eyes.0 -
The BRC report is so misguided in so many ways as already pointed out by earlier posts.
1. There is absolutely no guarantee that if banks lower the costs of accepting cards for retailers that retailers will then pass on the cost savings to consumers. In fact, in Australia where the fees that banks charge merchants for card payments were capped or removed, retailers there on average did not pass on the cost savings in full.
2. Retailers severely and habitually underestimate the cost of cash to their business. There is the cost of counting and transporting the money as well as the risks of damage to the notes and stealing, etc. Compare that to card payments where the retailer is guaranteed to receive payment and avoids all the cost of cash.0 -
The BRC report is so misguided in so many ways as already pointed out by earlier posts.
1. There is absolutely no guarantee that if banks lower the costs of accepting cards for retailers that retailers will then pass on the cost savings to consumers. In fact, in Australia where the fees that banks charge merchants for card payments were capped or removed, retailers there on average did not pass on the cost savings in full.
2. Retailers severely and habitually underestimate the cost of cash to their business. There is the cost of counting and transporting the money as well as the risks of damage to the notes and stealing, etc. Compare that to card payments where the retailer is guaranteed to receive payment and avoids all the cost of cash.
Not only that but the card processor has to insure retailers against card fraud, which costs also.Best Regards
zppp 0 -
Firstly what a really dull article and subject. The cost of card transactions is such a small overall cost, any reduction in cost for companies would be minimal and make no noticeable difference to the end prices.I don't get this either - I assumed this was the average per transaction cost to the retailer. However I can't believe the cash charges are so low - surely there are costs associated with banking the money, security, float etc which make taking cash just as costly for a retailer?
I think they are discussing banking costs? The cost of banking cash is low - a fraction of 1%.8.5p for a debit card transaction.
Just goes to show that some of the independents charging a £1+ just for using a card are making a profit of over 90% for card transactions. Like my local Chinese. It makes me want to stick chopsticks in their eyes.
Before you go on an ethnic killing spree, bear in mind these are averages! Tesco will pay just a few pence per transaction. Your local Far Eastern eatery will probably be paying 60p+ due the the low volumes. My company puts approx £1m of card transactions through each year and a debit card costs us around 20p to charge.0
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