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How money flows through the scheme

Drinks producers have several obligations under the regulations and can appoint a scheme administrator to discharge them on their behalf. It is anticipated that most producers will choose to do this, so this guide is based on this scenario. 

There are three key elements of the cash flow for Scotland's Deposit Return Scheme. These are:

  • The 20p deposit
  • The producer fee
  • The handling fee

Cash Flow explained

The 20p deposit

The main cash flow element is the 20p deposit. The flow of deposits is cost neutral for all parties.

Producers will likely pay a deposit for each drink they place on the market and report the number of containers they’ve placed onto the market to a scheme administrator(s).

The scheme administrator(s) will then invoice them for the deposit amount. For example, if a producer places 10,000 bottles and cans onto the market, they will pay £2,000 in deposits.

Each time the container is sold throughout the supply chain, the deposit is charged and paid by the buyer of the drinks, reimbursing the money to the seller:

  • Wholesalers will pay 20p on every bottle or can they purchase from drinks producers
  • Retailers will pay the 20p deposit on every drink they purchase from wholesalers
  • Consumers pay the 20p deposit on every drink they buy from retailers or another business

At this stage, every business has their deposit money back.

Hospitality businesses selling drinks to take away, will act in the same way as any other retailer in Scotland’s Deposit Return Scheme. The cash flow will be the same as for retailers.

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Businesses that sell drinks exclusively for consumption on-site will not have to charge the 20p deposit and will not act as a return point. 

You will still pay the 20p deposit when purchasing stock, and will then be reimbursed by the scheme administrator(s) for all empty containers you return to the scheme. 

Returns

Consumers will be able to take back their empty bottle or can to any return point in order to claim their deposit back. 

They are paid from the retailer’s own funds. The retailer then invoices the scheme administrator, who reimburses them (from the funds received from producers).

The return point is reimbursed by the scheme administrator for all the deposits it has paid out to consumers. 

This means that all participants - the producer, the wholesaler, the retailer, and the consumer - have their 20p back and no-one is left out of pocket. 

Producer Fees

Deposit return is an example of extended producer responsibility. It gives drinks producers responsibility for the correct disposal of the packaging their products come in.

It is anticipated that producers will pay a small fee for each container they put on the Scottish market. This would go towards the cost of running the scheme and would put the cost of recovering and recycling drinks packaging material onto the business that produces it.

Producers will report the number of containers they have placed on the market to a scheme administrator on a regular basis. The scheme administrator will then invoice the producer for the amount required. For more information on the producer fee, visit the producer page.

The level of the producer fees will be determined by the scheme administrator(s)

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Handling Fee

The handling fee makes the scheme cost neutral for return points.

Businesses and other organisations that act as a return point will receive a handling fee from the scheme administrator(s) to reimburse them for the cost of providing a return service.

It will take into account the costs incurred, such as labour, equipment like reverse vending machines, or lost floor space. The fee is paid on a per container basis. The exact level of the fee will be negotiated between the retailers and the scheme administrator(s).

For hospitality businesses that sell drinks exclusively for consumption on-site, the fee will only cover any additional costs associated with participation in the scheme. As these businesses already handle drinks containers, this will be the cost of materials used for collection and storage of containers at return point. This means a likely saving on waste collection costs for these businesses. 

In the case of a retailer providing a takeback service, they will receive a handling fee which covers the delivery costs associated with return of packaging.

For more information for retailers on compensation, visit our retailer page

Have a question?

Go to Frequently Asked Questions

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