Banks urged to cut ‘excessive’ card charges

The government needs to crackdown on how much banks charge for handling debit card payments, with fees almost doubling in five years, the British Retail Consortium (BRC) today warned.

Accepting debit card payments costs retailers four times more than when accepting cash, according to the BRC's annual payment survey.

An average debit card transaction costs retailers 8.5p, compared to just 2.1p for cash transactions. And when a customer pays by credit card it costs retailers an average of 34p per transaction.

The BRC said these charges are ‘excessive’ and not an honest representation of the costs banks actually incur in processing card transactions.

The BRC warns it is customers who ultimately pay. If charges for every payment method were as low as they are for cash over £480m in cost savings would be passed on to customers through lower shop prices, the BRC said.

Stephen Robertson, director general of the BRC 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 going down not up’.

As emerging contactless and mobile phone payment methods become more popular, retailers could face huge increases in costs if banks continue to charge high fees for card payments.

Retailers warned these extra costs will have to be passed onto customers through higher prices.

Robertson said: ‘"Contactless" systems can bring benefits but banks are currently levying charges on card payments well beyond what it actually costs them to process those transactions. They can’t expect to maintain those excessive charges as numbers of non-cash payments grow’.