- First published:
Government publishes its response to consultation on rules to cap the fees charged by banks to their business customers for processing credit and debit card payments.
These new rules, which are part of the Interchange Fee Regulation that the EU agreed earlier this year, introduce an EU-wide cap on the charges paid by a business when a customer pays for something using a card.
As set out in the consultation response, from 9 December 2015, the fees banks can charge will be capped at 0.30% for credit card transactions, and an average of 0.20% for domestic debit card transactions.
Making sure that 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 the UK’s reform agenda, and tackling unfair card fees was a key recommendation of the Prime Minister’s EU Business Taskforce.
The agreement secured on the Interchange Fee Regulation demonstrates how Europe can ensure that business and consumers alike benefit from the single market.
There were almost 10.7 billion credit and debit transactions in Britain in 2013, and UK Cards has estimated that the UK’s approach could save British retailers (up to £700 million a year). The government would like to see this benefit passed on to consumers in the form of lower prices.
Separately, the EU is also close to finalising a revision of the Payment Services Directive (PSDII), to prevent businesses from making money from customers who choose to pay by card by capping or banning the practice completely (depending on the type of card).
The Economic Secretary to the Treasury, Harriett Baldwin, said:
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.
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 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.
The consultation response also sets out the government’s approach to other national discretions under the Interchange Fee Regulation, including appointing the Payments Systems Regulator as the lead enforcer.
Today’s consultation response follows the consultation that the government launched on these rules on 27 July 2015.