Bank charges may hit those in debt

17/06/2010

Bank charges may hit those in debt

Debt hit families struggling to pay their bills and cope with rising living costs could bear the brunt of the high bank fees charged to retailers for accepting card transactions instead of cash.

A survey by the British Retail Consortium (BRC) has looked at the cost of collecting payments for over seven billion transactions in 21,500 types of shop and compared the results with previous years to track any changes.

It found that bank charges for handling debit card payments were higher than a year ago and had almost doubled in five years.

While cash transactions cost retailers just 2.1 pence, debit card payments cost almost four times more at 8.5 pence.

If a customer used a credit card then retailers were charged a massive 34 percent.

If charges for every payment were as low for cards as they were for cash then shop prices could theoretically be lowered by around 480 million pounds a year.

However retailers are instead worried that the ever increasing non-cash payment methods, from contactless cards to mobile phone payments, will be charged at the same sort of rates as plastic cards and that these costs will eventually be passed on to the consumer.

British Retail Consortium 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. Contactless systems can bring benefits but banks are currently levying charges on card payments well beyond what it actually costs them to process those transactions. They can't expect to maintain those excessive charges as numbers of non-cash payments grow.

In the end it's customers who meet these unfair costs in the prices they pay. Banks must reduce their charges to reflect more honestly the costs they actually incur in processing transactions."

Despite the increase in more sophisticated payment methods the BRC said that cash is still the most popular way to pay for goods and was used in 58 percent of all transactions last year.

Stephen Robinson commented that "Cash is still the most popular way of paying and the cheapest for retailers. Cash use had a boost in the recession. Many people find managing their spending easier with cash – you can't spend what you haven't got . But the longer term trend suggests cash use will slip gradually."

That may not be good news for those suffering from debt problems, as more bank charges push up the cost of all shop goods.

If you find shopping for the essentials is becoming harder and you're using plastic cards to pay for day to day living costs, then why not give Clearstart a call today and let our debt advice help you to become debt free? ADNFCR-3106-ID-19842989-ADNFCR