The UK Deposit Return Scheme is designed to be a simple process for consumers. They buy an in-scope drink, pay the refundable deposit, then return the empty container to get their deposit amount back. For retailers, though, this process is much more involved.
Retailers operating a return point will have new responsibilities around handling, storage, customer queries, return data, and financial reconciliation. It’s a complex operational change that requires serious planning.
The recent announcement of the Return Handling Fee, or RHF in short, provides retailers with greater clarity on how this aspect of the scheme will be funded. By setting out the payments that retailers will receive for handling returned in-scope drinks containers, Exchange For Change has given retailers a clearer basis for planning ahead of the scheme’s launch.
However, rather than being viewed as the endpoint of DRS planning, retailers should see it as part of the wider scheme operating model, which outlines how they will be supported in running return points.
In this article, we discuss what the Return Handling Fee is, what has been announced, and why retailers need to assess the operational realities behind the headline rates.
What Is the Return Handling Fee?
The Return Handling Fee is a payment made to retailers and return point operators for handling in-scope drinks containers returned under the Deposit Return Scheme (DRS).
Under the scheme, which is set to launch on 1 October 2027, consumers will pay a flat deposit when they purchase drinks that include in-scope materials (such as plastic bottles and aluminium cans). They can receive their deposit back if they return the container to an approved return point, such as a reverse vending machine or manual return point.
Although designed to be simple for consumers, DRS creates significant operational work for retailers behind the scenes. The return points will need to be operated, containers accepted and stored appropriately, customers supported, and return activity must be managed in line with the scheme processes.
To recognise the role of retailers in the scheme, the Return Handling Fee provides a payment for each eligible in-scope container handled through an approved return point. This is an important aspect of the scheme, as it brings retailers into the process. Instead of simply providing a drop-off point for in-scope drinks containers, retailers are operating these return points and becoming part of the national DRS infrastructure.
What Has Been Announced Regarding the Return Handling Fee?
Exchange For Change, the deposit management organisation for England, Scotland, and Northern Ireland, has confirmed the Return Handling Fee structure for the scheme ahead of the planned October 2027 launch. The announced fees are:
- Manual return points: 3p per container returned
- Automatic return points: 5p per container for up to 225,000 in-scope containers returned annually
- Automatic return points above 225,000 annual returns: 1.3p per container for additional returns
The fee structure has been developed following consultation, engagement, and analysis with retailers, producers, and trade bodies. It is designed to reflect the operating realities across the retail sector, from small convenience stores using manual collection processes to supermarkets operating multiple reverse vending machines.
The fees are expected to be reviewed ahead of launch and annually thereafter, allowing the scheme to adapt as real-world data and operational experience emerge.
This announcement gives retailers a clearer starting point for DRS planning. It also makes careful modelling more important, helping businesses understand how the fee structure will apply to their stores, return volumes, and operating costs.
Although the announcement of the fee structure is helpful for retailers, it doesn’t really answer an important question: what will it actually cost to operate a return point?
What Retailers Need to Plan Beyond the Return Handling Fee
The Return Handling Fee is an important part of the Deposit Return Scheme because it compensates retailers and return point operators for handling returned containers. However, it should not be viewed in isolation, as DRS introduces a new store-level operation.
Retailers need to consider the following carefully:
1. Choosing the Right Return Point Model
One of the first things retailers should consider is how they intend to receive the returned eligible containers. This often means choosing between manual and automatic return points, depending on the size of their operation. With greater clarity on the Return Handling Fee and wider support expected around reverse vending machine procurement, retailers are now better placed to assess investment decisions by location.
- Manual return points: This option is ideal for lower-volume stores where installing return infrastructure might not be feasible. Although it requires less equipment, the staff will have more responsibility and may need to check containers, issue refunds, handle rejected items, and perform other tasks tied to DRS.
- Automatic return points: This option uses technology such as reverse vending machines to manage DRS operations, making it best-suited for higher-volume locations. They make the return journey more structured and reduce manual processes, but the machinery requires maintenance.
Care must be taken when choosing automatic return points, as these machines come in different shapes and sizes. Choosing the right configuration (size and number of heads, as well as feed mechanism) has a massive impact on the consumer experience. Retailers using automatic return points will also need to consider machine location, store layout, maintenance, customer queues, data capture, rejected containers, and material collection.
With the Return Handling Fee now confirmed, retailers have a clearer basis for assessing which return model is right for each location. For some stores, a manual return point may be the most practical option. For others, particularly higher-volume or high-footfall sites, a reverse vending machine may offer a more efficient and scalable approach.
However, the decision should not be based on the headline fee alone. Retailers should consider expected return volumes, available space, staffing requirements, customer flow, storage, servicing, maintenance, and reconciliation. The right model is the one that works both operationally and commercially for the specific store environment.
2. Modelling Return Volumes at Store Level
Return volume is the number of containers a retailer expects to receive back via the return point. It’s without a doubt one of the most important metrics used to understand whether a return point will operate effectively.
Retailers should not assume they will have return volumes that match sales volumes. Some consumers will return containers months later or to a different return point, while others might not return them at all.
As a result, some locations may receive more returns than expected, while others receive fewer. High-footfall locations, such as supermarkets, shops, and stores near public transport hubs and in the city centre, are likely to become popular return locations for consumers across a wider area. Retailers need to estimate expected return volumes at the store level to understand how they could affect:
- Staff workload
- Queue management
- Storage space
- Reverse vending machine capacity
- Cleaning and maintenance
- Collection frequency
- Customer experience
- Reconciliation workload
- The commercial impact of the handling fee
The 225,000-container threshold for automatic return points makes modelling even more important. Retailers using automatic infrastructure must understand whether each location is likely to sit below or above that threshold, and what that means for the economics of operating the return point. Without volume modelling, retailers risk preparing for DRS in principle but not in practice.
3. Understanding Costs Beyond the Headline Fee
The Return Handling Fee gives retailers a payment mechanism, but it does not capture every cost involved in operating a return point under DRS. Retailers might focus on pence-per-container rates while overlooking the wider costs tied to operating a return point. These hidden costs may cover:
- Staff training
- Store layout changes
- Customer signage
- Customer communication
- Queue management
- Cleaning and maintenance
- Security
- Rejected container handling
- Storage space
- Collection coordination
- System changes
- Data management
- Reconciliation
- Manual workarounds
Some of these costs may appear small in isolation. When brought together, though, they can create a significant operational burden for retailers.
This can be made even worse if processes aren’t ready by the time DRS launches. Say, if staff don’t know how to handle returns, or if reconciliation isn’t made clear, the return point can quickly become a point of friction for retailers. In many ways, the hidden cost isn’t from handling the containers, but from handling the process poorly.
4. Separating Deposit Reimbursement From the Return Handling Fee
An important distinction retailers need to make is that the Return Handling Fee is separate from the deposit reimbursement in DRS. When a consumer returns an in-scope drinks container, they receive their deposit back. Retailers and return point operators then need to recover that deposit via the scheme.
However, the Return Handling Fee is separate from that reimbursement process. It is a payment retailers receive for operating the return point and handling returned containers. This means retailers have two connected, but separate, financial flows to handle:
- Deposit reimbursement: This is how retailers recover deposit values refunded to consumers.
- Return Handling Fee payment: This is a payment received for handling return point activity.
Both of these payments need to be tracked and reconciled accurately by retailers. Delayed or unclear deposit reimbursements could lead to cash flow pressures.
Similarly, if handling fee payments aren’t tracked properly, retailers will struggle to determine if the return point operation is financially viable. Return data, refunds, reimbursements, and fee payments must also neatly align; otherwise, finance and operations teams could face investigations and control issues.
From this view, it is clear that DRS is much more than a straightforward consumer-facing recycling process. For retailers, it’s an entirely new operational and financial system that requires careful navigation and management.
5. Managing Operational Risk
The Return Handling Fee is a core component of the DRS financial framework, but for retailers, it doesn’t remove the operational risk tied to running the return points. Retailers still need to understand how DRS will affect day-to-day operations.
For example, if return volumes are higher than expected, retailers may experience pressure on staff, space, queues, and storage. If they are lower than expected, investment decisions may need to be reconsidered. Or, if systems aren’t ready, teams might have to use manual workarounds.
Retailers should, ideally, treat the fee announcement as a planning trigger to prepare for DRS to mitigate as much operational risk as possible.
What Retailers Can Learn From Other DRS Markets
A useful way to prepare for DRS and understand how it will work in practice is to look at other successful schemes from across the world. These other DRS markets show that return activity can scale quickly once consumers grow accustomed to the scheme.
Ireland’s DRS Success
Ireland’s DRS shows how quickly return activity can scale after launch, with 635 million containers returned in the first 200 days. €110 million had been refunded to consumers, and the scheme managed to hit a 73% monthly collection rate.
For retailers, this example shows that return activity should not be treated as a small add-on to store operations. Once a scheme gains momentum, return points can quickly become a regular part of the customer journey.
Germany’s High Return Rates
Another useful example is to look at Germany’s more mature scheme, which can provide long-term context. Germany uses a one-way deposit system that collects around 20 billion packaging items annually, with a recycling rate of 99% for aluminium cans (as of 2023).
These figures show the potential scale and success of return point activity. If DRS rolls out efficiently, then retailers won’t be managing occasional returns. Instead, they will be supporting a high-volume system that relies on accessible, reliable, and well-managed return infrastructure.
What Retailers Should Do Now to Prepare for DRS
Since the announcement of the Return Handling Fees tied to DRS, retailers have greater clarity. However, to make that clarity useful, it must be translated into practical preparation for DRS.
From here, retailers should learn how the Return Handling Fee applies across the business, by store format, expected return volumes, return models, and operational costs. So, retailers should ask:
- Which stores will operate return points?
- Will returns be handled manually or automatically?
- What return volumes are expected by location?
- How many, and what configuration of, reverse vending machines will bring optimal consumer experience and financial return?
- How much space will be needed for returns and storage?
- How will customer flow be affected?
- What staffing model will be required?
- What training will store teams need?
- How will returned containers be secured and stored?
- How will collections be coordinated?
- How will deposit reimbursements be managed?
- How will Return Handling Fee payments be tracked?
- What systems need to support return data and reconciliation?
- Where could operating costs exceed the fee received?
- Who owns DRS readiness across the business?
Although extensive, these questions are directly linked to the Return Handling Fee in practice. For retailers, answering these questions can help prepare for success in DRS rollout.
Need Help Preparing for the Deposit Return Scheme?
The Return Handling Fee provides an important baseline for retailers in the UK preparing for DRS, but it doesn’t remove the complexity of implementation.
Retailers that treat DRS as a siloed store process risk being caught off guard. Return point activity creates operational, financial, and data requirements that need to be assessed across the business. By approaching DRS as a business-wide change programme, retailers will be better placed to manage cost, reduce disruption, and maintain control.
At DRS International, we help businesses prepare for DRS with insight and confidence. Our support enables retailers to understand their operational exposure and prepare for implementation with impact assessments, readiness diagnostics, implementation planning, and cross-functional mobilisation.
Get in touch with DRS International to understand what the Return Handling Fee means for your operations and start building a practical implementation plan.