By Daniel Hunter
UK retailers have welcomed a landmark proposal to cap card processing fees, which could support the industry by up to £362 million every year and strengthen its ability to invest and deliver value for customers.
The European Commission has proposed new regulations to cap interchange fees, which retailers pay to card schemes and banks to process payments customers make using credit and debit cards. These currently vary from 0.1 per cent to 2.5 per cent, costing UK retailers £850 million a year.
The British Retail Consortium (BRC) has been campaigning for a decade to cap the unjustifiably high fees, which are absorbed into retailers' costs. The average charge for credit cards is 0.9 per cent of the transaction, but the legislation would cap these fees at 0.3 per cent and debit card fees at 0.2 per cent.
The cap will apply initially to cross-border payments, rolling out to UK rates within two years.
"We're delighted with this landmark proposal. Capping these excessive and anti-competitive fees will support the UK retail industry by £362 million a year, boosting the industry's ability to invest and innovate
while continuing to deliver lower prices and value for customers," Helen Dickinson, Director General of the British Retail Consortium, said.
"While this is great news, there is a real opportunity for the Government to go further and faster by making more substantial and immediate cuts through the proposed economic regulator for payments — this means that UK consumers could benefit much more quickly."
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