Will rising card payment fees prompt the return of cash payments for retailers?

10 March 2022

Towards the end of 2021, retailers started sharing their concerns over the enormous rise in merchant fees being charged to businesses by Visa, which resulted in online retail giant Amazon taking Visa to task and publicly declaring that from January 2022, they would no longer accept Visa payments on their website.

Such a bold move from such a huge retailer was big news within the finance industry and shows just how critical the situation surrounding credit card fees has become in recent months. Despite an eventual truce between Amazon and Visa prior to Visa payments being suspended, the move has prompted other business users also feeling the pinch of rising fees from the major credit card providers to start thinking differently about card payments.

The rise in card fees has come about following the UK’s departure from the EU, which ended a long-standing regulation that previously capped the fees that card issuers could charge. This has resulted in card issuer fees being increased by a staggering £150 million a year, which has hit both the UK and European retail, leisure and hospitality industries hard.

Independent businesses, in particular, are struggling. Smaller premises are not only charged more for card terminals than bigger corporations, but with cards becoming more prevalent during the pandemic, after misinformation about using cash became rife (now completely disproven by WHO), the fees problem will only continue to get worse. Retailers will now be paying more because swipe fees are being collected on more transactions, which will also drive up prices for their customers too.

Add to this the other rising card payment-related costs currently faced by retailers, including card fraud, fraud protection, regulatory compliance, breaches of data and breakdowns and outages, and it’s yet another nightmare for retailers to contend with this year.

How backing cash payments can help 

So how can retailers and other businesses fight back against these rising card payment costs? The answer is simple - start encouraging and promoting cash payments again. In a poll amongst some of the UK’s leading retailers including Tesco, Card Factory and The Co-op Food Group, who attended Volumatic’s recent Cash 2030 conference, all retailers we asked said they happily accept cash, but only 38% of those stores actually promote cash usage, whereas 81% of stores promote card payments, which now effectively costs them more money.

Retailers attending the event also confirmed that the decline of cash usage during the pandemic is seeing major signs of recovery as of early 2022, and that millions of consumers still want to make purchases using cash, which means businesses should be supporting this – and in doing so can help themselves reduce rising card fees in the process.

One of the big advantages of cash is that it doesn’t come with sky-high issuer fees and multiple other charges, unlike card payments. And while for businesses, cash is still often seen as a burden, eating up time, money and staff hours to get everything processed at the end of the day, there are cash handling solutions that can reduce daily cash processing costs by up to 75% – step forward the CounterCache intelligent (CCi).

Volumatic’s award-winning CCi is the trusted solution for simple, one-touch cash handling across the globe with over 40,000 currently in operation for businesses such as Tesco, Morrisons, Wilko, The Co-op Food Group, McDonalds and Subway.

Essentially, the CCi acts as a money counter, secure cash storage and forgery detector all in one compact unit, positioned at POS, and it securely stores your cash in tamper-proof pouches so that your banknotes can't be touched. The CCi streamlines your cash handling processes, offering you both operational efficiencies and cost savings whilst reducing shrink and keeping your employees safer.

It works intelligently with CashView Enterprise - a web-based reporting and monitoring management tool that enables you to access your CCi devices via the cloud 24/7. It offers multiple configurable reports and gives you total visibility and control of all cash transactions across your entire business. The CCi can also be integrated with any EPOS system or cash reconciliation software platform, making it perfect for any business that handles cash.

And if all these benefits aren’t enough, Volumatic’s range of security enhancements for the CCi provide you with additional overnight security with a choice of the CCi security enclosures including the CCi Floor Mounted enclosure, meaning you can leave cash securely overnight, reducing your cash-in-transit (CiT) fees too.

While card payments are most definitely here to stay, and remain the most popular payment method amongst consumers, cash is still a valid payment choice, with over 23 million regular cash users in the UK (Enryo data – Dec 2021). This means that cash, when processed the Volumatic way, can play a big part in reducing the massive costs of unregulated card fees that the retail, hospitality and leisure industries are sure to face for years to come, and therefore should not be considered a secondary payment choice.

Mike Severs, Sales & Marketing Director at Volumatic said: “Cash has had a raw deal in light of the pandemic, but it’s coming back stronger and is still very much in favour with millions of people across the UK. Businesses need to embrace cash again and invest in cash handling solutions like the CCi that help them process cash efficiently and show the card issuers that they don’t rule the roost when it comes to payment choice.”

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