The European Commission has confirmed plans to implement a “landmark” cap on credit card processing fees which cost retailers £850m each year.
The new cap could save the industry £362m a year, therefore easing the pressure on costs and helping retailers invest.
The British Retail Consortium (BRC) has welcomed the ruling after a decade of campaigning to cap what they believe are “unjustifiably high fees”, which retailers absorb rather than pass on to the customer.
Retailers pay a fee each time a shopper pays by card. At present card schemes charge retailers 0.1% to 2.5% on purchases with the average charge per credit card transaction at 0.9%. The proposed cap would cut credit card fees to a maximum of 0.3% and 0.2% 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 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.”
The Government last month closed a public consultation on its regulation of the payment industry.
UK businesses that accept cards pay £2bn in total 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.
“Further analysis of the detail of the documents is now needed and we will continue to engage with the Commission, the European Parliament and Member States during the legislative process to ensure the interests of European consumers and all stakeholders are properly represented.”