Just Eat Slumps on Blow From U.K. Plan to End ‘Rip-off’ Card FeeBy and
Shares tumble most since the day after Brexit referendum
Charge for using credit and debit cards to end in January
A British proposal to get rid of charges on purchases made with credit or debit cards is threatening Just Eat Plc’s second-biggest source of revenue, sending the shares tumbling from a record.
Shares of the food-delivery service slumped as much as 9.4 percent on Wednesday, the most since the day after the Brexit vote. The U.K. Treasury said the new rule will come into effect in January, calling such fees charged by businesses including airlines and takeaway apps as “rip-off card charges.”
Shoppers are sometimes charged an extra amount for processing payments made with credit and debit cards, with the Treasury saying such surcharges amounted to an estimated 473 million pounds ($616 million) in 2010. Among other U.K.-focused consumer stocks hurt by the proposal were budget carriers EasyJet Plc and Ryanair Holdings Plc, while Domino’s Pizza Group Plc fell as much as 2.2 percent.
“Airlines are also likely to be affected by Britain’s plan to end card charges,” Neil Campling, an analyst at Northern Trust Capital Markets in London, said by phone. “The impact would be less because the estimated exposure is at a much lower percentage of earnings compared with takeaway apps.”
Just Eat, which competes with Uber Eats and Deliveroo, got about 13 percent of last year’s sales from payment card and administration fees, a March filing showed, the biggest contribution after commission revenues.
“The key market for Just Eat is still the U.K. market,” Campling said. “If restaurants will be under cost pressures, it will be more difficult for Just Eat to push up commission fees and transaction fees, which will be a concern for their business model going forward.”
Just Eat shares were down 2.3 percent as of 2:52 p.m. in London, paring its earlier drop as the broader European stock market extended gains amid positive U.S. data. The volume of shares traded on Wednesday was almost three times the daily three-month average.