Shoppers could save £480m a year if banks stop high fees for retailers processing purchases made with plastic.
British Retail Consortium (BRC) figures show that it costs a shop 2.1p when consumers use cash, whereas processing a debit card costs on average 8.5p and a credit card 34p.
The BRC calculates that if charges for debit and credit transactions were as low as they are for cash, shops could save £480m, which may then be passed on through lower shop prices.
With a promise from the Government of a bank shake-up in order for them to have more responsible standards, the high street is asking for a ban of the rip-off charges.
Transaction costs have doubled in five years and the BRC claims banks are "deliberately creating new card products – with much higher charges for retailers – and moving customers across to them."
Increased card use
BRC figures shows that cash is still the favourite way of paying at the till, with 58% of transactions made with this method.
For many people, using a credit card is the best option; the right one depends on your situation.
Cashback credit cards pay you a small amount every time you spend which, provided you pay the card off in full every month, can add up to £100s in free cash (See Cashback Credit Card guide).
Alternatively, other cards allow you to borrow at 0% for a set period of up to twelve months, which is the cheapest lending around, as long as it's planned, budgeted for, and affordable (see 0% Credit Card guide).
With cheques dying out and cash on a slow decline, banks are driving customers away from these methods to the ‘convenience’ of cards.
However, what the banks don’t reveal is the extra money generated from charges of interchange fees imposed for processing transactions.
BRC gave the example of HSBC which is rolling out new 'premium' or 'world cards'. These carry a processing or interchange fee of 0.7%-0.9% more than the average figure, which is generally 0.75% of the transaction value.
BRC director general, Stephen Robertson, 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."
The UK Cards Association says it doesn't believe stores would pass on any reductions in processing charges to shoppers.
A spokesman said: "Retailers negotiate their fees with their card companies regularly so the cost of accepting cards is highly competitive and can go up or down. However we are not aware of any retailer ever passing on cost savings to their customers."