Retailers call for cut in card transaction fees

Banks are being urged to cut their card transaction charges to reduce the strain on retailers.

Figures published by the British Retail Consortium (BRC) yesterday show that while cash is used in 56% of all transactions, it accounts for just 33% of retail spending.

The retail group said that the high credit and debit card transaction fees currently charged by banks are threatening the viability of some retailers.

The average credit card transaction costs retailers 35p, while purchases on debit cards set them back around 8p. This is compared to just 2p for cash transactions.

The BRC said that if charges for card transactions were as low as they are for cash, retailers could pass on over £800 million in cost savings to customers.

It is now calling for banks to reduce their charges to better reflect the actual costs they incur when processing card transactions.

"Banks are pushing new cards and payment technologies hard. Not surprising when they stand to make so much more in charges," said BRC director-general Stephen Robertson. "Despite the recession, they are looking to maximise their profits and protect their own interests at the expense of customers who ultimately meet these costs."

"There should be a lower fixed fee per transaction which actually reflects the true cost of processing."

Michelle Whiteman from UK payments association APACS told More Than Business News: "Retailers are provided with a service by their bank whether they make cash, debit or credit card payments.

"The cost of making credit card payments tends to be slightly higher because it takes into account not only the bank's service, but also the cost to the bank in extending an open line of credit."