A ROW has erupted between credit card issuers and store card companies after Ikea condemned the “hidden charges” on credit cards and unveiled plans to charge credit cardholders a fee in its stores.

In a move described as a “wake-up call” to the credit card industry, Ikea has exposed the fees it has to pay to Visa and MasterCard, the two payment scheme groups which administer card transactions, by passing the charges on to customers.

Shoppers paying by credit card will be penalised with a 70p fee from the beginning of next month in a move which the Swedish furniture giant says will save it £3.5 million a year. It said the savings would be passed on to customers in lower prices on products.

The introduction of the fees comes after Ikea’s decision last month to cut the interest rate on its store card from 26.8 per cent to 12.9 per cent.

Peter Hogsted, Ikea UK country manager, said: “The credit card industry thrives on hidden practices like imposing secretive administration charges on stores like Ikea. We are bringing these to light.”

Meanwhile, GE Consumer Finance (GECF), the consumer lending arm of General Electric, which controls about 50 per cent of the store card market, providing the cards for retailers such as Bhs, Laura Ashley and Arcadia, has also attacked credit card companies for using hidden charges.

In a presentation to the Competition Commission, GECF claimed that credit card companies earned 43 per cent of their profits from hidden fees, which included interchange fees imposed on retailers and over limit and late payment charges on cardholders.

Credit card companies, however, denied that the fees levied on retailers such as Ikea are hidden and they accused it of surcharging credit card customers to subsidise lower prices in its stores.

Sandra Quinn, a spokeswoman for the Association for Payment Clearing Services (Apacs), a body representing credit card companies, said: “What Ikea has done is particularly iniquitous and shows disregard for the convenience of the customer who wants to pay with a credit card.”

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