Ikea acts tough in credit card fightback

Ikea has thrown down the gauntlet to Visa and MasterCard by slapping a 70p cash charge on purchases made using the cards.

The Swedish giant blasted the credit card industry for 'secretive administration charges' that are costing its UK business£3.5 million a year. Cash saved will be used to fund price cuts.

'Ikea goes for transparent prices,' said Ikea UK managing director Peter Hogsted. 'Why should we differentiate our real prices in favour of the card companies to make Visa and MasterCard richer?'

About a third of Ikea's customers shop with plastic and Hogsted says that shoppers paying by other methods are subsidising the 'hidden charges', called interchange fees, imposed by the credit card operators.

'Diverting money away from the credit card giants means more money for Ikea to spend on slashing prices,' he added. 'The only losers will be the credit card industry.'

Ikea is lowering prices by£20 million this year and promises to add a further£3.5 million. Hogsted said of card charges: 'I don't think we will lose customers. Customers will see lower prices as a general benefit.'

The levy will come into force on September 1.

Fellow retailers greeted the move with interest. John Lewis said: 'We will watch and see what happens.' Asda said: 'We would not penalise shoppers for using a credit card.'

MasterCard said it was within a retailer's rights to surcharge customers, but would not comment on individual cases.

Visa failed to respond before Retail Week went to press.