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EU rules to limit retailer card fees

EU rules to limit retailer card fees

Category: Credit cards

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The European Commission has proposed new rules to create a cap on fees charged to retailers by credit and debit card providers.

The new rules, which are still awaiting approval, will initially mean that the cost of processing all cross-border transactions will be limited to 2% for all debit cards and 3% for credit cards.

For instance, if a UK cardholder were to make a purchase on their credit card in Spain, the card provider would not be able to charge the owner of the shop any more than 3% of the value of the transaction.

The initial cap is planned to last for a two-year period, after which the cap, may be extended to the so-called interchange fees on domestic payments using all cards.

Some consumer groups have aired their concerns that, whilst the introduction of a cap on charges may be good news for retailers, cardholders could incur higher debit and credit card fees as a result.

Banks have also warned that consumers might have to pay an extra £11 a year for transactions on their debit cards, whilst credit card fees could cost an extra £25 a year.

If signed off by the European Parliament and a number of countries in the European Union, the implementation of the cap could begin towards the end 2014.

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