The UK government will monitor retailers to ensure they pass on the £480m annual savings from the EU’s ban on excessive bank card fees to consumers.
Under new EU rules, interchange fees will be capped at no more than 0.3% for credit card transactions and 0.2% for debit cards from December 9. A consultation was held over the summer to determine how to apply the legislation in Britain.
Yesterday, the Treasury concluded that retailers should pass on the savings to customers, The Telegraph reports.
However, it is not clear how the government intends to monitor this. The Treasury said: “Some respondents asked how the government can be assured that savings gained by merchants will be passed onto consumers.
“The government notes that the European Commission is required to review the impact [of the fee cap] by 2019. The UK government will ensure it gathers evidence to feed into this review.”
The Treasury said shops and banks would be allowed “flexibility” in debit card interchange fees.
Instead of a flat 0.2% cap, there will be maximum fees of 50p or £1 per transaction. Banks and retailers will be obliged to ensure that across all the company’s sales for the year, the total rate levied is no more than 0.2%.
Credit card fees will be capped at 0.3% with no flexibility.
It has asked the Payments Systems Regulator to monitor the situation, to ensure banks do not hit retailers with other, disguised charges to recoup the shortfalls.