Card costs 'lower than five years ago'

An expert has said that store cards charge less now than in 2005.

An expert has defended the cost of processing card payments for retailers because these fees have dropped over the course of the last five years.

Store cards - which act like a credit card in so far as you are able to buy now, pay later, meaning that the money does not leave your current account immediately - have long been a popular way for people to buy retail items from their favourite shops.

However, a recent report by the British Retail Consortium (BRC) which was published earlier this month called on the government to intervene over the perceived excessive charges levied on retailers by banks for accepting payments via credit cards.

The study stated that a combination of unjustifiably high charges and the growth of non-cash payment methods could lead to both shoppers and retail outlets being hit while the banks enjoy financial windfalls.

The BRC found that banks' fees for handling debit card payments have almost doubled over the course of the last five years and the effects of the global economic downturn could mean that this figure will rise again in the near future.

Banks charge retailers 34 pence when a customer completes a transaction with a credit card, whereas this figure drops to 2.1 pence if the goods are bought using cash.

However, despite this upward trend analysed by the BRC, Sandra Quinn, director of communications for the UK Cards Association, maintains that these costs are fair due to the fact that they have dropped since 2005.

"The key thing from our point of view is that if you compare card costs from five years ago - they are lower [today]," she said.

The expert added that most card providers have justified such charges in the past by citing fraud protection arrangements and interest-free periods.

"What they [the BRC report] have not accounted for is that with a card service you might be getting a fraud guarantee. With cash, you lose it - it is gone," added Ms Quinn.