During a time when every penny counts, electrical retailers will certainly be welcoming 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 around £850 million a year.
The news is also well received by The British Retail Consortium, who had been campaigning for a decade for moves to cap the high fees, which ultimately are absorbed into retailer running 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.
Helen Dickinson, Director General of the British Retail Consortium, said: “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.
“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.”