Increased use of plastic over cash needs to be addressed
Life in plastic won't be fantastic for retailers if the credit and debit card industry continues to charge exorbitant rates for their cards and allied services.
14 February 2011
Most shops accept ‘plastic’ as a method of payment; indeed for some, it has undoubted benefits, allowing a purchaser to buy a product or service for which they did not have sufficient cash. For retailers, the benefits of accepting plastic as against cash should also be noted. We are slowly moving towards a less cash-based society, and plastic and derivatives of non-cash alternatives are gaining ground in all retail outlets.
Cash has some advantages for retailers, it allows them to divert takings into ATM, pay for produce and pay staff. It also needs to be insured, secured, transported and lodged, all of which have real costs attached to them. Many insurance companies have ceilings or limits to the amount of cash they are prepared to give cover for. A safe that needs to be acquired for the purpose of securing cash can be an expensive purchase. To comply with insurance companies’ requirements, the diverting of staff for the purpose of accompanying the cash lodgement has a cost, as does the alternative of paying cash in transit security companies, and finally, when the cash arrives at the bank, they manage to charge fees in the order of 35c – 50c per €100 lodged.
For these reasons, the move towards a less cash-focused society can have real benefits for retailers, now and into the future, but only if the plastic card industry behaves in a responsible and less greedy way than before.
The CSNA is very concerned that the plastic card industry will continue to charge exorbitant rates for their cards and allied services. The organisation is worried that the phasing out of the Laser debit cards will offer them an opportunity to increase the change for its replacement, a branded debit card.
Although this increase will most likely not be one based on a percentage of the purchase, as is the case in credit cards, the early indications are that the industry in considering a significant increase in the flat fee (currently 12c – 19c) that is associated with Laser transactions. All merchants should make their views on this matter known to their respective service providers; we will not accept increases in charges where there are no observable benefits to the merchant. It is time for the Financial Regulator and the Department of Enterprise to emulate their counterparts in the United States where the credit card companies have been subjected to a pro-business series of restrictions on their avarice and usury.
The cost to retailers of compliance, charges, administration and paper rolls associated with the acceptance of plastic is very significant; it needs to be addressed immediately as a priority.