The Government expects retailers to pass on to shoppers savings of £500m as a result of changes to bank card fees.
- Lower interchange charges expected to save retailers £480m
- Government expects savings to be passed on to consumers
- Banks to be monitored to ensure charges not disguised
From December, the amount retailers are charged by banks on card payments will be capped following the introduction of new EU rules.
Retailers will be monitored by the Government to check that consumers see the benefit of the shift, the Telegraph reported.
The new interchange fee limits are expected to save retailers approximately £480m per year.
Treasury documents published yesterday signalled that the lower costs will enable retailers to compete even more fiercely on price and that the cost of goods and services could fall by an average of about 30p.
The EU rule change means that banks should not charge retailers any more than 0.3% for credit card transactions and 0.2% for debit cards compared with an average of 0.85% at present.
The Treasury will allow some leeway on debit card payments. Rather than charging a 0.2% fee on costly items, for instance, there should be maximum charges per transaction of 50p or £1 but across a retailer’s entire business the amount charged should not exceed 0.2%.
The 0.3% credit card fee is fixed, however.
A new Payments Systems Regulator will scrutinise the changes to check that banks do not add or disguise other charges to make up for the money they lose as a result of the cap on fees.