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.
