Plastic payment pain: The cost to consumers and retailers is £1.3bn and rising. The EU could be poised to act. Will Britain?

One of the consequences of Brexit is that lots of important and necessary work done by the EU’s watchdogs is going to end up getting dumped on those in the UK.

Let’s take the example of payments, and the evidence that the dash towards plastic is contributing to retailers, and thus their customers, getting gouged.

Last year, the British Retail Consortium (BRC) says that the industry shelled out £1.3bn to accept customers’ card-based payments.

That’s an awful lot of extra cost to be borne by an industry that is up against it right now. And how. This morning sees the release of research by property law firm Boodle Hatfield that claims 55 football pitches worth of retail space was lost in the last year.

So how are all these charges being levied?

There used to be a big fuss over what are known as interchange fees, levied by customers’ banks. These had been the subject of a Competition and Markets Authority investigation, but it was closed in 2015 when the EU imposed a cap of 0.2 per cent per transaction by debit card and 0.3 per cent by credit card.

Good news for retailers and their customers then? Well, up to a point. Interchange fees are only one part of the equation.

There is also what’s known as an acquirer fee, which goes to the retailer’s bank for processing each transaction. And there are scheme fees charged by Visa, MasterCard or American Express.

In Britain the first two account for upwards of 98 per cent of the market.

According to the BRC, card fees increased by £70m last year, with most of the increase accounted for by rising scheme fees.

It would like the rules, and in particular the cap, to be extended, and simplified so that there are less carve-outs. An example of one of those would be corporate cards, that might be issued to you by your employer, are not covered by the interchange fee cap.

Its point is well made. Card/payment companies are huge businesses with pricing power, little apparent incentive to compete with each other, and every incentive to increase their fees. A retailer that refuses to take payments from one of them because of the what they charge is effectively shooting itself in the foot. They have little choice but to take it on the chin.

The EU is currently reviewing the rules, so there’s a chance that things could change for the better.

You’ll regularly hear people banging on about regulation and red tape imposed by the fabled Brussels bureaucrats. But sometimes that red tape and those bureaucrats are a force for good. This could be an example.

Of course, if the UK does Brexit it won’t be included. In the absence of action on the part of its regulators, payment companies will be free to gouge away to their hearts’ content.

Given the state of preparedness for Brexit, you’d imagine that that is what will happen. Unless Britain’s regulators are prepared to burn a lot of midnight oil, consumers, and businesses, are going to lose out.

Here’s a scary thought: this is just one example of an issue thrown up by Brexit, one irksome detail among many that the British government seems entirely unconcerned about.

Its ministers really are the high priests of negligence.