The National Franchised Dealers Association (NFDA) has written to HM Treasury and the Department for Business to highlight the ‘serious impact’ of debit card charges on dealers.

The EU Interchange Fee Regulation (IFR), which took effect throughout 2015 and 2016, imposed a new structure for fees charged by card processing companies.

Debit cards fixed per transaction fees were replaced by percentage fees similar to those applied to credit card payments.

Under the current system, businesses that trade in high value goods such as cars are facing significant extra costs. It is likely that these additional charges may be passed to the customer in the form of higher prices. 

NFDA director, Sue Robinson (pictured), said: “The NFDA has written to HM Treasury and the Department for Business, Energy and Industrial Strategy to highlight the serious impact that the debit card charges introduced by the Interchange Fee Regulation are having on our members.

“With the focus placed on value, rather than volume of transactions, the new system is adversely affecting some industries more than others. Automotive retailers are being disproportionately penalised with an extra £18.2 million now being paid in interchange fees.

“In addition, car retailers have previously moved away from taking cash payments to debit cards in order to prevent money laundering and the new charges are having a negative impact on the positive steps previously taken.

“In a period of uncertainty, it is essential that UK’s economic policies and regulations encourage investment and spending for both businesses and consumers.

"The IFR is a damaging policy that should be reconsidered following the UK’s exit from the European Union, if amendments cannot be made.

“NFDA urges the Government to support us and call on the Commission to bring forward the impact assessment date to 2018.”