Labour MEPs have voted for a new EU law to cap credit and debit card fees, which will save British business £480 million. For debit cards, this cap will be at 0.2% of the overall value of the transaction, and for credit cards it will be 0.3%. The legislation will come into force in September 2015.
Jude Kirton-Darling, Labour MEP for the North East, said:
“What you may not know, because no one ever tells you, is that every time you use your credit or debit card in a shop, the shopkeeper is being charged for the privilege. Their bank charges your bank for the cost of processing the payment, and the whole thing is administered by the card scheme (the likes of Visa and Mastercard), which passes the cost straight back to the shopkeeper. If the shopkeeper wants to offer people the option of paying by card, then they have to pay.
“These charges are immensely frustrating for two reasons. Firstly, the shopkeeper has no bargaining power to bring them down. In most other areas of life, if you are offered a service then you shop around until you find the cheapest and best option. In this case, all the options are expensive.
“The banks are the ones who get to choose which card scheme they use – be it Mastercard, Visa or someone else – and, because they make money from the fees charged, they are bound to pick the one with the highest fee. In this world, the card schemes compete on who can be the most expensive.”
Paul Brannen, Labour MEP for the North East, said:
"This will be great news for British shopkeepers and British shoppers alike, with the fees charged for using credit and debit cards capped once and for all. Thanks to action taken by Labour MEPs at a European level, the costs of doing business will come down - and prices should fall too.
"This is exactly the kind of thing we should be tackling at a European level, and it shows what we can achieve when all 28 EU countries work together.
"We know technology can often make the world easier: you can take a small piece of plastic with you on holiday and take money out of a Spanish ATM or pay for dinner in an Italian restaurant. But it can make the world less transparent as well, if we are not careful - we don't always know whether technology is working in our best interests.
"That is why Labour MEPs are standing up to vested interests, for the benefit of British businesses and British families. Thanks to this new law, UK shoppers' lives will be a little clearer, a little fairer and a lot cheaper."