CONSUMERS could end up losing out from a new European cap on debit and credit card processing fees, lawyers and banks warned yesterday.
The rules capping interchange fees are intended to help consumers by reducing the cost of transactions and were championed by EU commissioner Michel Barnier.
The European Commission yesterday approved rules to limit the interchange component of debit card transactions to 0.2 per cent of transaction size and credit cards to 0.3 per cent.
It also bans extra charges for card payments such as those often found in airline ticket purchases.
The Commission estimates that will bring a benefit of €6bn (£5.2bn) per year for retailers, and €730m for consumers – and hit banks, as they receive much of the interchange fees.
“Although one of the Commission’s ultimate aims is to drive down costs for consumers, it is possible that market players will look to reallocate costs and services so that ultimately consumers end up paying the same,” said Jacob Ghanty from law firm Berwin Leighton Paisner.
“Consumers may end up paying more for the cards themselves – perhaps by imposing annual card fees, which used to be the norm for credit cards in the UK.”
And the European Banking Federation warned the cap means less money can be spent on the payments sector, hitting investment in innovation and in infrastructure, delivering a worse service for shops and consumers.