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Card Fee Cap Could Save Businesses £480m

Card Fee Cap Could Save Businesses £480m

Card Fee Cap Could Save Businesses £480m. The Treasury hopes the change will push prices down for shoppers and encourage more businesses to allow card payments.

Businesses are set to save millions as a cap on credit and debit card transaction fees comes into force.

The EU has imposed a limit on how much card companies can charge retailers to use electronic payment systems.

The Treasury says the cap is designed to push prices down for consumers.

When shoppers in the UK use debit or credit cards, a percentage of the purchase price is paid by the retailer to the card company.

From today, fees on credit card transactions will be capped at 0.30%, well below the average of 0.85%.

Debit card fees will be limited to 0.20% of the transaction value. The current average is about 0.21%.

According to the European Commission, interchange fees amount to £1bn per year in the UK, although some estimates are double that figure.

The British Retail Consortium believes the cap could save British businesses up to £480m a year.

But there is concern that card companies will recoup their costs in other ways.

Nick Frankcom, a banking expert at uSwitch, said: “One of the unfortunate effects of this is that many card companies are now cutting reward schemes and cashback schemes that many of us rely on for that little bit extra from our spend.”

A cashless society is quickly becoming a reality and the cap – which the Prime Minister’s EU Business Taskforce pushed for – may encourage more places to allow card payments.


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John Lewis And House Of Fraser Increased Sales In Festive Period

John Lewis And House Of Fraser Increased Sales In Festive Period

John Lewis And House Of Fraser Increased Sales In Festive Period. House of Fraser has reported its best Christmas while John Lewis also credited stronger online business for an increase in festive sales.

The two department store chains’ fortunes were in stark contrast to those of rival Debenhams, which has issued a profits warning and confirmed it had lost its chief financial officer in the wake of poor sales.

House of Fraser, which trades from 61 stores in Britain and Ireland, said like-for-like sales excluding VAT for the three weeks to December 28 rose 7.3%, with online sales up 57.7%.

Like-for-like sales excluding VAT for the first nine weeks of its fourth quarter were up 4.3%, the firm said, adding it expected to finish the year with lower net debt, which stood at £157.2m for the year to January 26 2013.

The firm, which made a loss before tax and exceptional items of £6.9m in its last fiscal year, has reportedly been in talks with French department stores group Galeries Lafayette over a possible sale.

It has spent almost a decade under private ownership but had been considering a return to the stock market after previous attempts at a possible trade sale had failed.

John Lewis said it had grown like-for-like sales by 6.9% over the five weeks to December 28, with total sales topping £734m.

That performance included a 1.2% boost for its stores and a 22.6% rise in online takings compared with 2012.

The first day of clearance sales in branches on December 27 saw the biggest ever day of trading across the business, taking £35.6m.

John Lewis also highlighted what it called the UK’s first ‘mobile Christmas’ as three-quarters of Christmas Day online traffic came from phones and tablet computers.

Managing director Andy Street said sales over the five weeks had taken a different shape to previous years, with an early peak and a “huge surge” in the last 10 days, including a frenetic Monday two days before Christmas.

“Many of the big online shopping days and weeks occurred earlier in the period but shops were packed in the last-minute rush on ‘manic Monday’ when we saw our city centre shops record peak days,” he said.

He added that “must-have” items included tablet computers, Christmas lights and coffee machines.

Sales at John Lewis, which regularly publishes weekly trading figures, are seen by analysts as a useful insight into spending patterns – though its customers are viewed as less likely to be affected by the squeeze in income than average shoppers.

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Debenhams CFO Quits After Profits Warning

Debenhams CFO Quits After Profits Warning

Debenhams CFO Quits After Profits Warning. The chief financial officer at Debenhams has quit the retailer, just 48 hours after it issued a post-Christmas profits warning.

Simon Herrick had already been under pressure, according to media reports, after he asked suppliers for a discount on goods just eight days before Christmas in what was seen as a ‘Santa tax’.

The department store chain denied at the time of his letter to suppliers that it was an attempt to boost fragile festive trading.

In the letter he wrote: “As we will mutually benefit from the growth of Debenhams we are now seeking a contribution from our suppliers to support our commitment to on-going investment.”

He said this would include: “A single-sum contribution on all outstanding payments on your account at close December 17.”

“An additional discount of 2.5% applied to all open orders on our system at close on December 17.”

“This is a contribution and not a permanent amendment to your trading terms with Debenhams,” the letter said.

The company, which lowered its profit outlook on Tuesday after the hoped-for surge in last-minute Christmas shopping failed to materialise, said a search to find a replacement for Mr Herrick was under way.

Neil Kennedy, director of finance, has assumed the role of acting chief financial officer on an interim basis, Debenhams said.

The chain blamed its poor Christmas performance on the continuing decline of the high street, the impact of the recession on household incomes and bad weather.

The retailer said it was planning to slash prices in January and February.

Michael Sharp, chief executive of Debenhams, said on Tuesday: “As has been widely commented on in the media, the market was highly promotional in the run-up to Christmas and we responded to these conditions to ensure our offer was competitive.

“However, this extremely difficult environment has inevitably had an impact on both our sales and profitability.”

The announcement, which had been due on January 17, saw the retailer reveal an £85m profit for the 17 weeks to December 28 – some way off the £114.7m in the same period last year, a 26% drop.

The company’s statement showed that online sales had increased by 27% during that time and accounted for 15.6% of total sales, compared to 12.4% for the same period last year.
Its share price has tumbled by 20% over the past month.
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