Retailers react angrily to impending consumer legislation

RETAILERS will be banned from giving discounts to customers who pay by cash rather than credit cards under new legislation, Retail Ireland has warned.

Sections of the Consumer Protection Act intended to prevent companies forcing customers from paying by direct debit will also have an unintended effect on credit card payments, according to the organisation.

Ireland is one of just three countries in the EU where Visa and MasterCard cannot force retailers to treat credit cards the same as cash. The other two are Britain and the Netherlands.

Cash is on average 10 times cheaper for retailers to handle than credit cards, as they have to pay up to 2% of the cost of the purchase to the banks for handling the card transaction.

This is passed onto the consumer in the form of higher prices that, according to the European Commission, costs households an average of €139 a year, whether they use cards or not.

But throughout the EU, Visa and MasterCard write into their contracts with retailers that they cannot make cards less attractive to consumers to use, such as discounting cash or debit cards.

Torlach Denihan, director of Retail Ireland, said Sections 48 and 49 of the Consumer Protection Act strengthened the hand of the card companies in Ireland in this regard.

“We do not see why someone cannot offer a discount to consumers paying cash,” he said.

The sections of the latest consumer legislation, which has not yet been signed into law, were late additions to the bill introduced in the Senate after a cable company tried to insist that its customers must change over to direct debit or face higher charges.

“This has had the unintended impact of reducing the bargaining position of a whole range of businesses, from retailers to the hotel and catering trade, with the credit card companies.

“We hope the Government will not sign these into law but instead deal with the kind of problem posed by the cable company through the code of practices to be drawn up for businesses by the new National Consumer Agency,” he said.

On a separate issue related to credit cards, Mr Denihan said his association was keeping an eye on the changes being made to debit cards such as Laser to make them ready for the Single Euro Payments Area being introduced throughout the euro area in January.

In several countries the cards have been taken over by Visa and MasterCard, who have imposed new fees that are greatly increasing the costs to retailers and which in turn affects prices in the shops.

“We are very keen that Laser continues as a brand and not be supplemented by Maestro which currently only kicks in when the Irish card is used outside the country. We are nervous about this, seeing what has happened in a number of other countries,” he said.