UK Credit and Debit Card Processing Fees to be Capped Later this Year
Wednesday, 19 August 2015
Fees that banks charge to businesses for processing credit and debit card payments are likely to be capped across the UK, that is according to new Government proposals, which the Chancellor George Osborne said should lead to lower prices for consumers.
It’s estimated by industry experts that the proposed rules could save UK businesses up to £480 million each year.
Sources at the Treasury have confirmed that they are currently in the process of consulting on the proposals, which are part of a wider set of regulations relating to charges paid by retailers for card transactions that were agreed on by the European Union earlier this year.
This will mean that from December 9th this year, these fees will be limited to just 0.3% for credit cards and 0.2% for debit cards.
The Government could impose lower caps as part of these EU regulations. However, they’ve decided that the default level set out in the agreement is sufficiently low enough already.
“Ensuring the EU has a competitive financial services industry that works in the interests of consumers and supports the wider economy is a key pillar of our reform agenda.” said Osborne.
“That’s why we are determined to tackle the unfair fees that Britain’s businesses are often charged when their customers pay by card – fees which are often passed on to consumers.”
“And that’s why I am delighted that we reached an EU agreement to reduce the fees that banks can charge businesses for processing card transactions. I expect businesses to pass on these savings to consumers in the form of lower prices.” he added.
The Treasury said of their new proposals that British Business would save up to £480 million each year on the estimated 10.7 billion credit and debit card transactions in the UK annually.
Sources at the Treasury added that the agreement on interchange fee regulation went someway to “demonstrate how Europe can ensure that businesses and consumers alike benefit from the single market”.