By Daniel Hunter
Customers' willingness to use new payment technologies that are easier for them and cheaper for retailers should send a message to the payments industry establishment that their existing charging regimes have to change.
For the first time, the British Retail Consortium (BRC) has compiled figures from retailers quantifying the development of self-service tills and of contactless and e-payment methods.
The retailers in the survey take almost 60 per cent of total retail spending. In response to customer demand for fast ways to pay, one in five of their tills is now self- service (31,506 out of a total of 149,886) and the range of retailers offering self-service has broadened. More than 20 per cent of tills in non-supermarket retailers, such as chemists, DIY stores and stationers are now self-service.
A quarter (24.8 per cent) of self-service tills are ready to accept contactless payments — 29.4 per cent of all tills.
The BRC survey also shows how new players are becoming significant competition for banks' payment services business and have the potential to drive down costs for retailers and so, in turn, for customers.
Non-card methods, mainly e-payment systems such as PayPal, were used in 150 million transactions, worth £1.2 billion, last year — replacing the credit and debit cards from traditional card-issuing banks which would previously have been used to make these payments.
A third of all respondents said they had accepted one of the emerging payment types - PayPal, Google Checkout or Amazon Payments — during 2011. Half indicated they will be ready to by the end of 2012.
This is very significant for retailers and banks because the average cost to a retailer of having a credit or charge card payment processed was 36.2 pence, for a debit card it was 9.6 pence, but for those non-card methods (including e-payments), it was 7.9 pence. These evolving payment methods are the cheapest non-cash way for retailers to accept payments.
"In a world of claims and counter claims about which products represent the future of payments, we're presenting exclusive data, straight from checkouts and websites," British Retail Consortium Director General Stephen Robertson said.
"There are lessons here for the established commercial interests in the payments industry. Customers are adopting new ways of paying that deliver advantages for them and for retailers.
"For example, self-service tills offer a quicker checkout process for people buying a few items and let stores provide more tills in the same space. They also free up staff to work in other parts of the business.
"And other payment methods, such as mobile, PayPal, Google and similar products, are challenging the banks' market domination. Very quickly, those payment methods have gone from a standing start to accounting for £1.2 billion of retail sales per year.
"The message is; customers are choosing to use a payment method that doesn't always involve the banks and is the cheapest non-cash way for retailers to take money. With the market moving away from them, the banks should be making their transaction charging regimes clearer and, above all, cheaper for retailers."
The numbers in this Future Payment Methods Analysis have been generated from the BRC's annual Cost of Payment Collection survey which examines the ways in which customers are choosing to make payments and the big differences in costs imposed on retailers for processing the different payment types.
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