Mastercard and Visa have been accused of capitalising on the crisis caused by the COVID-19 pandemic by charging their customers ‘excessive fees’.
The fees charged by the companies have almost doubled over the last two years according to British retail groups.
They warn that the extra costs will be passed on by retailers to consumers, adding an extra £40 to credit card bills annually.
Speaking to the BBC, the head of finance policy at the British Retail Consortium (BRC), Andrew Cregan, said: “It is vital that the government takes action to tackle excessive card costs. If a phone or energy company increased their fees by such an amount there would uproar.
"It's an abuse of a dominant market position by these companies. They're two of the most profitable organisations in the world and they've got merchants over a barrel.”
The BRC is calling on the Competition and Markets Authority (CMA) to investigate the payment companies.
A spokesperson for Mastercard said: "Card-based payments continue to grow in popularity with consumers as they offer unrivalled convenience, security and protection.
"More shops and businesses are also adopting them either for the first time or in new contactless or digital formats, as they too benefit from faster, more efficient and secure payments, which in turn generates significant value for their businesses.”
A spokesperson for Visa said: "Visa enables millions of merchants throughout the UK to access the benefits of digital payments, giving them the ability to reach billions of potential customers both in their local communities and across the globe. Visa has delivered to UK consumers some of the most secure and innovative payments solutions available anywhere in the world.”
Trade bodies in the hospitality and retails sectors have joined up to take action against rising card fees, as social distancing rules have forced many of them to accept only card payments.
The British Independent Retailers Association’s commercial director, Jeff Moody, said that local businesses are being hit harder as they haven’t got the power to negotiate better rates with the credit card firms.
"The contracts available to large national chains are often not available to individual smaller independent retailers," said Moody.
"With card transactions now the majority of their payment transactions, these costs are therefore being felt by consumers.”
The Federation of Small Businesses’ national policy and advocacy vice chairman, Martin McTague, added: "The costs that accompany acceptance of card payments represent yet another overhead for embattled small retailers.”
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