Calling it a “move to honest pricing,” the furniture store chain IKEA has added a $1.25 charge to credit card purchases made at its United Kingdom stores.
For now the charge is in effect only in the United Kingdom. Purchases made with debit cards, IKEA’s store cards, cash, and checks will not be affected.
The charge represents the average amount IKEA must pay for each credit card transaction, the company said in a Sept. 1 press release. Its U.K. stores pay around $6.3 million of credit card charges a year.
“The scale of these charges by the credit card operators has been criticized widely, but the credit card industry says they are necessary to pay for the administration of the credit card system,” IKEA said in the release.
In a Q&A at its Web site, it said, “We want to take this money from the credit card industry and put this into the pockets of our customers. Saving money that currently goes to credit card companies gives us a whole new revenue stream with which to reduce prices even more aggressively.”
About one-third of its U.K. customers pay by credit card, IKEA said. The average amount of a credit card purchase is $197.
Recently IKEA has marketed its store card as an alternative to Visa and MasterCard products. Last month it cut the interest rate on the store card by more than half, to 12.9%. It compared its rate to those charged by Visa and MasterCard issuers, which, according to IKEA, can be as much as 29.9%. That is the rate it said Capital One Financial Corp. charged for its Capital One Bank Classic MasterCard.
IKEA Group, which is owned by the Dutch-registered Stichting INGKA Foundation, operates 140 stores in 22 countries, including the United States.
