The British Retail Consortium has refuted claims that a proposed cap on credit card charges for transactions would see extra costs passed on to consumers.
The move, under consideration by the European Council after being approved by the European Parliament earlier this year, would see interchange fees capped at 0.3% on credit card transactions and 0.2% on debit cards. UK fees currently range from 0.1% to 2.5%, according to the BRC.
This week MPs and business groups lobbying against the proposed cap, including Conservative MP Jacob Rees-Mogg and various card issuers, cited findings from a report commissioned by MasterCard, which argues bank customers could be forced to pay higher charges as banks seek to recoup revenue lost due to the fees cap.
However, the BRC said independent studies showed no automatic link between a decrease of interchange fees and an increase in annual card fees. Its head of payments Richard Braham told Drapers the current system was “anti-competitive” and lacked transparency, with retailers paying the bulk of the £1.7bn collected annually in UK charges.
He said: “Banks encourage customers to take their cards and at the same time the cost to retailers to accept these cards increases year on year. Retailers have no ability to negotiate that. This can be particularly detrimental to small businesses, which invariably pay the highest fees.
“We want to know what the real cost of the transactions are.”
He added that the UK is behind other European countries with domestic caps on credit card charges, including France, Spain and Poland.
Retailers backed the BRC ’s stance, saying the cap could make a “big difference”. David Swain, manager of menswear independent Cockney Rebel in Worksop, Nottinghamshire, said: “You don’t have any choice with credit or debit cards; you either have it and pay the charges or you don’t. I’d welcome a cap on anything like that.”
Mimi Noor, owner of the eponymous womenswear retailer in Bath, said: “As an indie you don’t have much leverage. It comes straight off your bottom line, so having it capped could free up a bit of your budget.”
In August the BRC , which has long campaigned for more transparency over interchange fees, issued an open letter from 15 senior figures, including Next chief executive Lord Wolfson and Marks & Spencer chief executive Marc Bolland, calling on the EU to act.
The letter said: “Failure to implement lower domestic fees is harming UK companies’ ability to compete in Europe by imposing higher costs on UK retailers.”