The British Retail Consortium (BRC) claims an average cash transaction costs retailers 2.1 pence compared to 8.5 pence for a debit card payment and a massive 34 pence when a customer uses a credit card.

The group, which bases its figures on over seven billion transactions in 21,500 shops, says that if charges for every payment method were as low as they are for cash, over £480 million in cost savings would be passed on to customers through lower shop prices.

The retailers are also "seriously concerned" that inflated debit card charges will be the norm for emerging contactless and mobile payment methods which are expected to eat into cash usage for low value transactions over the next few years.

Stephen Robertson, director general, BRC, says: "There is no justification for such big differences in charges between cards and cash. With payment technology and efficiency developing, card charges should be going down not up. 'Contactless' systems can bring benefits but banks are currently levying charges on card payments well beyond what it actually costs them to process those transactions. They can't expect to maintain those excessive charges as numbers of non-cash payments grow.

Retailers on both sides of the Atlantic have been battling banks and card firms over interchange fees for years. In May the US Senate voted to give the Federal Reserve powers to regulate debit card interchange fees, handing a victory to merchants over Visa and MasterCard. In Europe the firms have been fighting the EC, which has accused them of infringing European competition law.

Meanwhile, the BRC figures show that cash was used for 58% of all transactions in 2009, up from 56% in 2008 but down on 61% in 2007. In terms of money spent, 32% of all retail spending was done with cash in 2009, compared to 33% in 2008 and 34% in 2007.