The new government should intervene to cut the excessive charges banks levy on retailers for accepting plastic, according to the British Retail Consortium.
The combination of unjustifiably high card charges and growth of non-cash payment methods promises big windfalls for banks and a financial blow for shops and customers, the BRC says.
New figures released by the BRC show that accepting a payment by debit card costs a retailer four times more than when a customer uses cash. The consortium’s annual Cost of Collection Survey also shows that banks’ charges for handling debit card payments have almost doubled in five years.
An average cash transaction costs retailers 2.1p, a debit card payment costs 8.5p, and retailers are charged 34p when a customer uses a credit card.
The BRC says retailers are concerned that banks plan to make the higher debit card charging regime the norm for the emerging contactless and mobile phone payment methods.
Retailers are also unhappy that banks are creating new card products, with much higher charges for retailers, and moving customers across to them. HSBC is to roll out new premium or world cards, which attract additional interchange fees of between 0.7 and 0.9% on top of the average 0.75% of the transaction value that the retailer previously paid.
“There is no justification for such big differences in charges between cards and cash,” says BRC director general Stephen Robertson.
“In the end it’s customers who meet these unfair costs in the prices they pay. Banks must reduce their charges to reflect more honestly the costs they actually incur in processing transactions.”