BRC says cut card charges

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Government must act to reduce punitive charges for accepting plastic.

The British Retail Consortium has said that the government must intervene to cut the excessive charges levied by banks on retailers for taking card payments.

Figures published by the BRC show that accepting payment by debit card costs a retailer four times more than when a customer uses cash. As non-cash payment grows in popularity high card charges will provide a windfall for banks but will be damaging to businesses.

Bank charges for handling debit card payments are higher than a year ago – having almost doubled in five years. An average cash transaction costs retailers 2.1p in banking charges. A debit card payment costs 8.5p – but retailers are charged 34p when a customer uses a credit card.

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Retailers are concerned that banks are planning to make the higher debit card charging regime the norm for the emerging contactless and mobile phone payment methods. If that happens, retailers would face huge cost increases as cash is replaced by these new forms of payment. Customers would also suffer as costs would have to be passed on.

BRC director general Stephen Robertson said: “There is no justification for such big differences in charges between cards and cash. With payment technology and efficiency developing, card charges should be doing down not up.”

The latest BRC survey shows cash was still the most popular form of payment in 2009 – at 58% of all transactions. However, Mr Robertson warned: “The longer term trend suggests cash use will slip gradually.”

The BRC’s annual Cost of Collection Survey includes results from over seven billion transactions in 21,500 shops of all types. It examines year-on-year changes in payment methods used by customers and the charges to retailers from banks and card schemes for processing those payments.

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