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Last Updated: Wednesday, 24 October 2007, 17:06 GMT 18:06 UK
Shops denounce credit card costs
Credit card machine
Retailers say it costs more to process plastic than cash
Retailers have accused banks of charging too much to process debit and credit card transactions in shops.

The British Retail Consortium (BRC) said the banks' promotion of card use instead of cash was a "self serving" attempt to bring in more money.

Every time a credit card purchase is processed, retailers have to pay a transaction charge, which the BRC puts at 17 pence for a purchase worth 20.

By contrast, charges for banking cash come to just four pence for 20.

"Banks have long abused their position by imposing much higher charges on retailers for processing card payments than cash," said Kevin Hawkins, director general of the BRC.

"Clearly the banks have spotted that replacing cash with cards would mean a further boost to their profits," he said.

APACS, the trade association for credit card providers, did not comment on the BRC's complaints.

New ways to shop

In the past four decades the use of plastic cards - first credit cards, then store and debit cards - has transformed the way people shop.

The use of cheques for buying everyday items has almost come to an end, along with the once familiar delay in a supermarket queue as someone ahead of you struggled to write out a cheque for their shopping.

Even so, cash is still very popular and has far from died out.

The BRC's own survey shows that cash is still used for 54% of all transactions, and for 32% of all money spent in shops, stores and supermarkets.

That was in line with figures published this summer by the card payments organisation Apacs.

Tax on shoppers?

The traditional advantage for retailers in accepting plastic has been convenience and a reduction in the threat of being robbed.

However the underlying charges for accepting the cards, levied on shops by the card issuers such as Mastercard and Visa, have been under regulatory scrutiny for a long time, both in the UK and in Europe.

Earlier this year the Office of Fair Trading (OFT) said it would investigate the so-called "interchange fees" that banks levy for processing debit card payments.

That was in addition to its existing investigation of the fees that the card organisations, Mastercard and Visa, levy on shops for processing credit card purchases.

The OFT had previously described these fees as being little more than a tax on shoppers.

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