Retailers to see cap on credit card fees
British fashion retailers are to see an ease of card processing fees, as a new ruling will cap “unjustifiably high fees” for processing customer purchases. Whether buying online or in brick & mortar stores, the cap could save the industry as much as 362 million pounds a year.
Retailerspay a fee for each customer transaction Currently retailers pay a fee each time a shopper pays by card. At present card schemes charge retailers 0.1 percent to 2.5 percent on purchases with the average charge per credit card transaction at 0.9 percent. The proposed cap would cut credit card fees to a maximum of 0.3 percent and 0.2 percent for debit cards.
The cap will apply initially to cross-border payments, such as a UK resident making a purchase from elsewhere within the EU, before rolling out to UK rates within two years. BRC director general Helen Dickinson said: “We’re delighted with this landmark proposal. Capping these excessive and anti-competitive fees will support the UK retail industry by 362 million pounds a year, boosting the industry’s ability to invest and innovate while continuing to deliver lower prices and value for customers.”
But Dickinson added that the Government could do more. She said: “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.”
UK businesses that accept cards pay 2 billion pounds in interchange fees each year at present.
Visa Europe President and Chief Executive Peter Ayliffe said: “Secure, efficient, competitive and innovative electronic payments are crucial to the European economy. Payment cards provide huge benefits to consumers, retailers and the economy as a whole and we are concerned that these proposals will be detrimental to the innovation that will support European economic growth. There is little evidence to support the claims that these proposals will be beneficial to consumers.