Plans to cut cost of credit card use

Plans to cut the cost of credit card use will be unveiled by the European Commission next week, despite wide-scale lobbying by VisaEurope, MasterCard and Groupement Cartes Bancaires.

Consumers, whether they pay with cash or a card, are paying about €2 in every €100 because of credit card fees while retailers are paying about €14bn a year in card costs.

The companies and their relationship with banks has been described as a cartel by the Commission and the European Court has agreed, leading to the action that is expected to see costs capped at 0.2% for debit and 0.3% for credit card transactions.

Ireland is one of eight countries that already has charges of less than 0.2% for debit card transactions but not for credit card costs.

The move has been welcomed by a range of consumer and retail bodies, including EuroCommerce that represents retail and wholesalers across the EU. The changes could save large enterprises about €3bn a year, according to a Commission assessment.

Christian Verschueren, director-general of EuroCommerce, said: “These fees, which only benefit the banks, are wholly hidden from consumers but increase the price of all goods and services whether or not a card is used to pay.”

The Commission will announce the changes as part of a payments package on Wednesday designed to contribute to the single market, level the playing field in the EU and remove barriers to trade, including internet and mobile payments.