New EU proposals could see you paying to do your shopping
A new EU white paper is expected to be published later this month aimed at tackling card fees charged by banks to retailers, known as interchange fees. Currently banks charge retailers around 8.5p for a debit card transaction and up to 34p for a credit card transaction, which is why some retailers have minimum spends for using a debit card, or, more commonly, a credit card surcharge.
Now it seems these fees are due to be the EU’s next target, with retailers dancing with glee at the prospect of capped or outlawed card charges. So why are we not also delirious? After all, what’s good for retailers is good for consumers, right?
Well, maybe not. You see banks collectively pocket a tidy sum from card fees, and they will be reluctant to wave goodbye to that cash. If they are blocked from charging retailers for accepting cards, consumer groups fear they will start charging bank customers for using them.
Of course, if retailers are making 8.5p-34p more profit per sale, they’ll be bound to pass that saving on to consumers, meaning everyone will be happy in the long run, and essentially, in the same position. Presumably those levying whacking great card charge fees will be forced to scrap them (or not, mentioning no names Mr O’Leary); however, similar fiddlings with the interchange market in Spain and Australia did not see any savings passed on to consumers.
So, although the EU are trying to help businesses by tying the hands of the banks, and such proposals would ultimately benefit retailers, it looks like it could be you and me actually paying the price. We will be particularly affected in the UK, as many more of us use cards for more purchases than anywhere else in the EU.
Europe Economics spokesman Dr Andrew Lilico said: “We think a White Paper later this month will outline plans to scrap or cap interchange fees.
“When this happened in other countries we found the money retailers saved was not passed on to customers. It is also plausible that in the UK it could lead to charges being brought in for bank accounts which are currently free.”
Damon Gibbons, director of the Centre for Responsible Credit, said
“The European Commission’s proposal is not the way forward. Reducing interchange fees risks increasing the cost of card use for UK consumers, who use cards more than anywhere else in Europe.”
Nigel Farage, supreme leader of UKIP told the Express “Pah, I told you the EU were robbing so and sos” “This is classic interference… In trying to be populist the consumer as ever loses as bank charges will rise to cover the banks losses.”