In most cases I have seen the "alternative" electronic payments charge far more to the merchants than most general purpose payment card acquirers do. 4 - 5% of the sales value is not unusual. This partly due to the fact that the "alternative" methods usually lack competition with only one monopoly acquirer/ merchant service provider/customer service provider since these methods often are three party systems(customer, merchant and network). Also the payment process at checkout can be cumbersome and time consuming. Such payment methods will not succeed unless they become competitive with general purpose cards in all aspects and stop relying on the "novelty" or "mobile phone form factor" as the unique selling point.

Yes, my understanding too was that payment methods like PayPal were more expensive for the retailer than credit or debit card merchant service charges.  Where did the BRC get its figures from?  Does anyone have reliable figures for the relative costs?

Some electronic payments, PayPal including, do rely on cards (there is a clear logic how PayPal channels payments) "behind the scene", so the fees and the infrastructure are still the same. 

Account-linked or some close-loop payments can bypass some parts of the payment chain, but it's an open question who truly benefits from that.

And then there is an issue of liability: if you pay via PayPal but using your card, guess who liable in case of fraud.

I was in Pizza Express the other day. At the bottom of my bill was an option to download their app and pay for my meal using PayPal and I wonder why they want to encourage that?

As observed by other contributors, since I don't hold funds in my PayPal account, if I did make the payment that way it would end up as a card transaction anyway.

Maybe someone from PayPal or Pizza Express can explain?

I checked on the web.  Here are PayPal's merchant charges:

Merchant rate fee schedule

Purchase payments received (monthly)Fee per transaction£0.00 GBP - £1,500.00 GBP3.4% + £0.20 GBP£1,500.01 GBP - £6,000.00 GBP2.9% + £0.20 GBP£6,000.01 GBP - £15,000.00 GBP2.4% + £0.20 GBP£15,000.01 GBP - £55,000.00 GBP1.9% + £0.20 GBPabove £55,000.00 GBP* 1.4% + £0.20 GBP

Merchant service charges for credit and debit card payments are negotiated on a case by case basis between each merchant and acquirer, so it's difficult to give examples, but they are commonly understood to be driven by card scheme interchange rates (ie the merchant lobby claim that interchange rates are the major cost component of merchant service charges).  For the UK, Visa and MasterCard appear to have fixed £0.10 and £0.08 interchange rates respectively for a "secure e-commerce" debit card transaction.  So much lower than PayPal.  I think BRC are winding us up!

@BRC: Now that your bluff about PayPal being cheaper than credit / debit cards has been called by @NickC and others, are you still planning to go ahead with PayPal? If you do, hope you enjoy yourselves until you find your account frozen arbitrarily, you discover a new meaning of the term "bad customer service" and you can't find any regulator to whom you can complain.