Contactless costs

FluffyVal

I believe the costs to the retailer of a customer using a contactless card is between 1.4% and 1.6%.
I was just thinking how much the use of contactless had increased since Covid.
This was a bank windfall. 

Shouldn’t the banks reduce the amount they charge the retailer. This would be fairer to the retailer and could (yes could) trickle down to the consumer. 

It only seems a small amount but the increased usage justifies the change

born_again

Cost is the same for contactless & Chip & Pin to banks. So no windfall to them. 

Slinky

There may be a difference in the cost to retailers. I recall having a conversation a couple of years ago with a lady at the till in a National Trust shop and she said it cost them more for a C&P transaction than a contactless. Things may have changed since then, it was a while ago.

ETA it can cost small retailers with much lower transaction numbers way more than the figures quoted above. I ran my own business until a few years ago; the galling thing is being charged X% on the VAT in addition to the net cost. In the end I encouraged my customers to pay into my bank account and only took card payments by phone from new customers to ensure I was paid.

penners324

Don't forget there are plenty of costs for using cash.

Some banks charge business for depositing cash, plus security, travel and time costs to get to the bank and count the cash

greyteam1959

penners324 said:

Don't forget there are plenty of costs for using cash.

Some banks charge business for depositing cash, plus security, travel and time costs to get to the bank and count the cash

All banks charge for banking cash & have done for many years.
So much per £100  banked 
And if you wanted change for your tills you then charged so much per £100 for that as well 

DullGreyGuy

FluffyVal said:

I believe the costs to the retailer of a customer using a contactless card is between 1.4% and 1.6%.
I was just thinking how much the use of contactless had increased since Covid.
This was a bank windfall. 

Shouldn’t the banks reduce the amount they charge the retailer. This would be fairer to the retailer and could (yes could) trickle down to the consumer. 

It only seems a small amount but the increased usage justifies the change

It will depend on the size of the company and their turnover on card payments. Small companies pay more than large ones, as with most things. Almost anyone can buy a Zettle machine and pay 1.7% big businesses can be below 0.5%.

Having cash adds a lot of cost too... employee time cashing up, dealing with change, banking, insurance for having the cash on site, banking fees for depositing cash or getting change, dealing with the till being under/over. Manual accounting entries -v- system integration with card payments. 

MattMattMattUK

FluffyVal said:

I believe the costs to the retailer of a customer using a contactless card is between 1.4% and 1.6%.
I was just thinking how much the use of contactless had increased since Covid.

The costs depends on volume, if one goes with one of the easy options for small businesses such as iZettle, SumUp etc. then the rate will be around 1.5-1.75%. Small businesses with a large volume can get that down to around 1.0-1.4%, large operators such as supermarkets, major retailers etc. will be paying less than 1%, I think when Amazon threatened to drop Visa credit card last year the figures talked about were 0.4-0.6%.

FluffyVal said:

This was a bank windfall. 

As others have said the banks are also losing the cash fees, and businesses are not having to pay them, as well as reduced insurance premiums. The decline in cash has hugely reduced those and when I worked in the hospitality trade 20+ years ago it was estimated that the cost of cash transactions (banking fees, insurance, losses due to theft, mishandling of cash, time to cash up etc.) was around 4.5-6% of cash transaction value, even when card providers used to charge 3-5% they were still the better option. 

FluffyVal said:

Shouldn’t the banks reduce the amount they charge the retailer. This would be fairer to the retailer and could (yes could) trickle down to the consumer. 

The margins on card transactions are pretty tight, from my somewhat limited understanding their margins are less than 10%, so there is not a huge scope for reductions. 

FluffyVal said:

It only seems a small amount but the increased usage justifies the change

Not really, no.