EU plans could make banks “creative” in clawing back losses

July 15, 2013 at 2:50 pm

EU plans due out later this month are expected to reduce or even wipe out the fees that banks are allowed to charge retailers for accepting payment by credit or debit cards.

This is expected to cost the banks around 34p per transaction. Whilst in an ideal world it would make sense for the retailers to pass on the savings to their customers, it seems far more likely that the retailers will hang on to the savings and banks will become ever more creative in clawing back the money that they are losing.

There are fears that this could mean the end of using debit and credit cards without fees payable by the customer. When changes were introduced in Spain and Australia to the “interchange” fees paid by retailers to the banks, it was the customer who ended up losing out.

Europe Economics (which recently produced a report for MasterCard) predicts that customers will end up paying up to £25 a year for using a credit card and £11 a year for a debit card. Banks may also start charging customers for withdrawing cash at ATMs.

British people use their credit cards more than any of their European neighbours, and they will be hard hit if the dire predictions are accurate. In December 2012 a sizeable 74.7% of all retail transactions were made on plastic.

Richard Koch, of the UK Cards Association, summed up the reaction of many by saying that “the British are used to, and like, free banking. The Commission’s model would impact on the card issuers’ ability to continue that.”

To see a copy of the full report click here.

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We could soon be able to pay in a cheque using our mobile phone

July 5, 2013 at 2:56 pm

The use of cheques has declined in recent years but, for those of us who do receive cheques, it is often a real inconvenience. Unless you are comfortable sending the cheques to your bank by post, it means a trip to the bank, either to pay them in using a credit point or via a cashier. Imagine if you could take online banking one step further and pay the cheque into your bank account virtually. It seems that this may not be such an unlikely dream, although it would involve a new law being passed.

The idea is that customers could take a photo of the cheque and, using an app, the money would be transferred into the correct account. Two thirds of the UK owns a smartphone and many people already use it routinely for taking photographs. It would therefore be no problem for them to take a photo of the front and back of the cheque which would show the name of the payee, the sum involved, the sort code and bank account number and, all importantly, the signature. A smartphone app would make sure that the money is transferred to the correct bank account.

Any sceptics will be pleased to know that this system has been used very successfully in countries such as Canada, Spain and the USA since 2009. The campaign for introducing the same system to the UK is being spearheaded by Intelligent Environments, a company which produces software for the financial services sector.

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