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Proposed cap on card processing fees is unveiled

 

Plans to impose a cap on ‘unjustifiably high’ processing charges for credit and debit card transactions have been published by the European Commission.

 

Retailers are required to pay ‘interchange fees’ to card schemes and banks to process customer payments made by credit or debit card. Charges currently vary from 0.1-2.5%, depending on the size of the retailer, and are thought to cost UK shops and businesses around £850m a year.

 

Under the new proposals, interchange fees for debit cards would be capped at 0.2% of the transaction value, while credit card charges would be capped at 0.3%.

 

Retailers have welcomed the proposed changes, which they say could ultimately lead to lower prices for consumers.

 

Director General of the British Retail Consortium (BRC), Helen Dickinson, said: ‘We're delighted with this landmark proposal.

 

‘Capping these excessive and anti-competitive fees will support the UK retail industry by £362m a year, boosting the industry's ability to invest and innovate while continuing to deliver lower prices and value for customers.’

 

However, banks have criticised the proposals and have warned that their customers may be forced to pay higher annual charges to use debit and credit cards as a result.