Fees paid by European retailers to process non-cash transactions will be capped at 0.2% for debit cards rates and 0.3% for credit cards under new laws set to come into force by autumn 2015.
The draft terms, which will be formally approved next year, were agreed on Wednesday night by negotiators for EU member states and the European Parliament.
Retailers across Europe currently pay €13bn in fees according to the Financial Times, with rates in some member states reaching as high as 1.8%.
In the UK, where annual paymets total £1bn, only credit card interchange fees are charged at a percentage, debit card transactions cost retailers a flat rate of around 8p.
The move is welcomed by the British Retail Consortium, which said the caps will lead to increased investment in businesses.
Director general of the BRC Helen Dickinson added: “We are delighted with this historic and landmark agreement. We have long campaigned for a cap on excessive and anti-competitive card payment fees. Once implemented in the UK during the course of 2015 this will enable the retail industry to invest an extra £500 million a year in innovation and value for consumers.
EuroCommerce director general Christian Verschueren said: “We are especially pleased at the agreement on debit cards – the option for member states to set a five cent maximum cap will bring certainty and efficiency. We are also pleased at the time-limit on the unclear weighted average option – although a shorter sunset clause would have been a better option.”
“Our one major disappointment is the failure to include commercial cards in the caps, although we understand there is to be a strict ‘business expenses only’ definition. We call now for an agreement on the Payment Service Directive which ensures that merchants in all member states may surcharge such cards,” he added.