Bank Cards: Fees and Charges

HM Treasury written question – answered on 30th March 2017.

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Photo of Anna Turley Anna Turley Labour/Co-operative, Redcar

To ask Mr Chancellor of the Exchequer, if he will make it his policy to encourage retailers to abolish charges for customers using card payments for transactions.

Photo of Simon Kirby Simon Kirby The Economic Secretary to the Treasury

Merchants currently pay a merchant service charge to process all card transactions. Part of this covers the fees that a merchant acquirer can be charged by a card issuing bank for processing transactions known as interchange fees. The Interchange Fee Regulation (IFR), which came into force in December 2015, caps the fees that could be passed on to consumers from merchants in the form of higher prices at 0.2% and 0.3% for debit and credit cards respectively.

The Government has been clear that it would like to see merchants passing on these savings to their customers so that they continue to benefit from the interchange fee caps.

From January 2018, the Payment Services Directive 2 introduces a ban on surcharging which means that retailers will no longer be able to charge consumers to use payment instruments for which interchange fees are regulated, which includes the majority of consumer debit and credit cards.

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