Shoppers to save at tills as EU caps banking card fees
SHOPPERS will benefit from plans to cap the fees banks can charge when processing credit and debit card payments, European Commission officials have said.
The commission has proposed a cap on the charges that banks can apply for accepting Visa and Mastercard payments.
Fees for processing credit and debit card transactions – known as intercharge fees – are a lucrative revenue stream for banks.
The commission believes that capping these fees will bring savings of €6bn for retailers, which will then be passed on to shoppers.
Commission officials are recommending a limit on fees charged by banks to just 0.2pc on the value of a debit card transaction and 0.3pc on credit cards. Currently, the fee can be as high as 1.7pc.
"The interchange fees paid by retailers end up on consumers' bills," said Joaquin Almunia, the EU commissioner in charge of anti-trust enforcement, who announced the measures.
"Retailers will make big savings by paying lower fees to their banks and consumers will benefit through lower retail prices," he said.
A roll-out of the cap could begin from around the end of next year, after the conclusion of negotiations with the European Parliament and European Union countries.
But the head of Mastercard in Ireland, Peter Corrigan, claimed that the EC move would lead to either higher credit card interest rates for customers or higher banking transaction fees.
This, he said, was because banks would lose money as a result of the proposals now coming from Brussels.
In the last few weeks, AIB and Bank of Ireland have hiked the fees that they charge consumers for processing debit and credit card payments.
Mr Corrigan told the Irish Independent that the commission's move to protect consumers was likely to backfire and would end up benefiting retailers.
Similar moves in the US, Australia and Spain had ended up giving higher fees to retailers for accepting payments on electronic cards, but these savings were not passed on to consumers, he said.
Banks in these countries lost some of the revenue they get from card transactions and reacted by hiking current account fees and customer charges for card purchases.
Mr Corrigan added: "The impact of imposing caps will be to significantly reduce the fees for banks. Retailers will gain but the savings will not be passed on to consumers."