Adapting to changing consumer requirements: helping small businesses

Increasingly, people are paying by card instead of cash. As a result, the economy is heavily reliant on card payments for goods and services.

Although this is a positive change, there is an underlying problem; retailers have to meet costs for card payments and these costs are increasing considerably for medium to high value transactions.

The primary reason for this is that the Government introduced the maximum percentage cap on interchange fees of 0.2% and 0.3% on debit and credit cards. This led to Visa (which is responsible for 90% of UK consumer debit and credit cards) removing its commercial cap of 50p per transaction. This increase meant that any transaction over £250 has become more expensive for a small business.

Of course many people spend over £250 in one go, on bicycles, computer gear, et cetera. Larger chains are able to take this cost, smaller businesses are less able. As a result smaller businesses are disadvantaged.

I am asking for the Treasury to introduce a total value cap of 50p, to remedy this situation and make small businesses more competitive.