Visa and Mastercard have been accused of charging ‘excessive’ fees which could cost shoppers an extra £40 per year
Visa and Mastercard have been accused of charging excessive fees during the coronavirus pandemic. This comes after businesses were forced to shift towards card payments to adhere to social distancing rules.
UK retail groups have said that fees charged by the financial companies have almost doubled in the last two years. The extra costs could potentially be passed on to consumers, with credit card bills increasing by another £40 per year.
‘An abuse of a dominant market position’
Head of finance policy at the British Retail Consortium (BRC), Andrew Cregan, told the BBC, “It’s an abuse of a dominant market position by these companies. They’re two of the most profitable organisations in the world and they’ve got merchants over a barrel.”
In the BRC’s latest Payments Survey, card schemes were found to be the “least competitive layer of the card payments ecosystem”, with Visa and Mastercard controlling 98 per cent of the UK Market.
Cregan added, “It is vital that the government takes action to tackle excessive card costs. If a phone or energy company increased their fees by such an amount there would be an uproar.”
A Visa spokesperson responded, "Visa enables millions of merchants throughout the UK to access the benefits of digital payments, giving them the ability to reach billions of potential customers both in their local communities and across the globe.
“Visa has delivered to UK consumers some of the most secure and innovative payments solutions available anywhere in the world."
A Mastercard spokesperson said, "Card-based payments continue to grow in popularity with consumers as they offer unrivalled convenience, security and protection.
"More shops and businesses are also adopting them either for the first time or in new contactless or digital formats, as they too benefit from faster, more efficient and secure payments, which in turn generates significant value for their businesses."
Accelerated move to card payments
Hospitality and retail trade bodies have united to call for action to tackle excessive card fees, as more of them have been forced to accept card only payments in order to adhere to social distancing rules.
The BRC said the average cost of a card transaction for retailers is 1.42p. Accepting payments by debit cards have lifted that cost up to 5.88p, while credit card payments cost retailers on average 18.4p.
David Sheen, public affairs director at UK Hospitality said there needs to be protection from excessive fees, because retailers did “the right thing.”
He commented, “The events of the last few months have accelerated a move towards the use of card payments across hospitality, with many now not accepting cash on safety grounds.”