Cash Processing VS Credit Card Processing

Cash Processing VS Credit Card Processing

The above is an ongoing debate at this time, and given that The British Retail Consortium (BRC) introduced their report outlining the fees connected with debit and credit card processing, and the fees connected to cash payment processing, there has been much contention about whether or not banks should lower these card processing merchant fees.

As there are three major ways of paying these days (Cash, Credit Card and Debit Card) there exists little point in analyzing the costs for cheques and store cards etc; according to the BRC cheques amount for less than 1% of transactions these days and this will soon be zero as stores become significantly more selective.

If groups like The Payments Council wish to streamline the retail card processing industry they should consider that cash payments are not going to decrease whilst merchant rates for credit card processing are still high. The store continues to have a choice in the matter. Whilst cash payment aren't going to lose it's appeal anytime soon, an expanding and buoyant market exists for credit and debit card processing - individuals expect to be able to pay with their card and the retailer must decide on whether to adopt the technology to process the card payments.

At European level

If we look much further afield you can also see that it's pretty much the same in Europe; at least Western Europe. In European countries cash payments amounted for over 78% of retail transactions in 2008, despite the steady increase in cashless payments. The move to replace cash in Europe isn't really moving forward at the pace that was expected and a cashless society is still some way off.

Cash payments

As cash is clearly still very popular, and even with people that would say it's dying out as a retail payment option, and very strong in the UK and the rest of Western Europe, a cash replacement is more than likely going to be created; specifically if merchant card processing fees restrict companies from entering the card processing arena owing to cost.

It does appear that at the moment the war between cash and card processing just isn't being won by the new payment methods. New merchant account providers are bucking the trend in regular charges and offering better services for lower cost - this is a trend that will keep going and will drive the card processing industry forward.

A replacement for cash could be on the cards then, and this will have to be thought out by The Payments Council in the UK, the Payment Services Directive, and the Single Euro Payments Area (SEPA).

The near future looks bright and as companies come on board to challenge the traditional bank acquired merchant services, this can only serve to minimize merchant fees and make credit and debit card processing possible for all business.

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