Ikea claims it will save �3.5m

At present, a third of Ikea purchases are made with a credit card and the retailer says this means it has to pay �3.5m in charges to card operators.

The retailer said the levy was "a move to honest pricing" and customers would benefit from lower prices as a result.

However, consumer groups have described the move as "unwelcome and confusing".

Price benefits

I can only see consumers being confused by IKEA's decision Mike Naylor, Consumers' Association

Under present arrangements, companies such as Visa and MasterCard take 70p on average from Ikea for each credit card transaction.

"Saving money that currently goes to credit card companies gives us a whole new revenue stream with which to reduce prices even more aggressively," Garry Deakin, Ikea spokesman said.

"The extra price cuts will be certified by our independent auditors as being over and above our usual price cuts - customers will see the benefits in the coming weeks and months. The only losers will be the credit card industry."

Ikea added that the charge would only apply to UK outlets.

However, in response, Mike Naylor, spokesman for the Consumers' Association told BBC News Online that the levy was an "unwelcome development."

"It will be virtually impossible to see if this charge leads to lower prices. I can only see consumers being confused by Ikea's decision," Mr Naylor said.