Credit card rules are holding back the development of e-commerce, according to the UK's Institute of Directors.

It says firms are being deterred from selling goods over the internet by the reluctance of credit card suppliers to allow online payments.

The IoD carried out a survey of its members; 76% of firms responding had customer websites, but only one-third of those allowed shoppers to place orders via their sites.

The IoD says this is blocking the development of e-commerce in the UK while the United States is forging ahead.

One internet company, lastminute.com, says it faces what it describes as "ludicrous bureaucracy" from the banks.

But the organisation representing credit card suppliers says they have to be cautious because they could end up having to compensate customers whose goods don't arrive.

The IoD also called for lower telephone call charges as a priority over lower line rentals, because members foresaw increasing use of the internet.

"The IoD's members are increasingly aware of the importance of e-commerce. We must work to ensure that everyone is fully aware, and to remove the obstacles preventing British business from taking full advantage of the opportunities," said Richard Baron, of the Institute's policy unit.