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Debit cards become no.1 payment method in UK, but is the price still too high for retailers?

Laura  Barnes
Debit cards become no.1 payment method in UK, but is the price still too high for retailers?

More than 50 per cent of all retail transactions were made by debit cards throughout 2016, according to the new Payments Survey from the British Retail Consortium (BRC).

The survey found that debit card purchases have overtaken cash for the first time in the UK. The BRC says this growth is thanks to more retailers investing in payment technology to facilitate choice, and retail customers becoming less reliant on credit cards.

It is the first time that cash has ceased to be the largest payment category with the share of debit card transactions growing by 4.5 per cent to almost 43 per cent of all retail transactions, overtaking cash transactions, which saw a 5 per cent shrinkage in its share of retail purchases to account for 42 per cent.

Falling average transaction values (ATV) of card payments, both in debit and credit cards, shows that cards are increasingly displacing cash for lower value payments.
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Investment in payments has been boosted by savings of around £500m for retailers and their customers from the EU Interchange Fee Regulation (IFR), introduced following a successful campaign by the BRC, which caps some of the fees for handling credit and debit card transactions.

But the BRC is warning that there is still more that needs to be done to help lift the burden of accepting card payments for retailers and businesses.

“Retailers still spent more than £1bn in 2016 to accept payments from customers and the cost of processing cards remains high, particularly for credit cards,” says the survey.

“The Government should act to guarantee the benefits of the Interchange Fee Regulation (IFR) after Britain leaves the EU, bring expensive commercial cards within scope of the legislation, and restore the monetary cap for debit card transactions.

“The Payment Systems Regulator should take a proactive approach in supporting the interests of all end-users and in addressing the recent surge in scheme fees and other charges for processing credit and debit cards.”

Read the BRC's full 2016 Payments Survey here.

Tags: Retail , brc , card payments , debit cards , payments survey 2016

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