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New UK Finance analysis shows 357.4 million credit card transactions in May 2022, up 26.9% from May 2021.
Organizations are not always ready (or eager) to accept credit cards.
Total spending was 19.9bn, up 33.1% from May 2021. As a result, businesses of all sizes and industries had to prepare to start accepting credit cards as a payment method.
With card usage soaring, it’s no surprise that the UK payments regulator, the Payment Systems Regulator (PSR), has started to set its sights on the various fees charged by card networks. Established under the Financial Services Bank Reform Act of 2013, the PSR will review certain fees charged by the country’s two largest card networks, Mastercard and Visa, determine whether card payments are working, Merchants, and ultimately consumers, save. Together, 99% of card payments are made through payment rails.
The move to make pricing more transparent comes at a time when the use of credit cards for B2B payments has increased. Due to the growing interest from payers, more companies are looking to enable his B2B credit card payments.
At least one factor is the changing buying landscape for B2B purchases. Digital avenues are a big part of the decision-making and buying process. Today, one in five B2B decision makers are willing to spend between $500,000 and $5 million per interaction in remote or self-service channels. According to McKinsey’s latest B2B Pulse study of 3,500 B2B decision makers surveyed in . Credit cards also favor accounts payable departments as they facilitate access to electronic statements and access to rebates.
Here’s the kicker organizations aren’t always ready (or eager) to accept credit cards. However, more transparent fees could encourage B2B credit card payments. Nearly two-thirds of respondents to a recent Association for Financial Professionals survey said their organization would prefer paper checks (still his preferred method of payment for B2B) to electronic payments if the cost benefits would be beneficial. said to replace it.
When it comes to electronic payment methods, businesses care more about the cost of credit card payments than any other payment method. Much of that cost is confounded by the payment gateway providers themselves, who lump the charges together and pass them on to merchants as a flat rate. When everything isn’t broken down, it’s hard to understand what you’re being charged, and it’s hard to find ways to cut that cost.
PSR has set up two market reviews. One is the scheme and processing fee and the other is the cross-border interchange fee. The latter has increased fivefold since the UK left her EU. The exact outcome of the review is not yet known, but the consultation paper outlines plans for his PSR, with various possible releases including the release of government-issued guidance and requirements to change operating rules. Results are listed. The UK had already made headlines late last year for being a bit of a proving ground for challenging card fees when Amazon threatened to stop accepting Visa-issued cards on its platform.
The good news is that there are actions organizations can take now to make credit card fees more transparent. These include:
