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EU rule could force £11 debit card charge on Britons

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EU rule could force £11 debit card charge on Britons

Post  Panda on Tue 2 Jul - 8:50

EU rule 'could force £11 debit card charge on Britons'
Customers have been warned that a proposed change in European Union rules may force banks to introduce annual charges of £11 on debit cards and £25 on credit cards.

Extra fees could be imposed on credit cards
By Andrew Oxlade
6:00AM BST 02 Jul 2013
165 Comments
The European Commission last year produced a Green Paper suggesting that "interchange fees", those imposed on retailers by the transaction firms Mastercard and Visa, should be capped or banned. Those plans are expected to be published as a firm proposal later this month.

But opponents have argued that it would force banks to pass the cost on to customers. Telegraph Money reported earlier this year that perks on credit cards, such as cashback, could be axed or eroded, and fees might be introduced.

A new report released on Tuesday, commisioned by Mastercard, estimated that the loss to card issuers could be £2.4bn with £2.2bn of savings for large retailers but with "no evidence that these savings are passed on to the consumer in lower prices".

It said that as a result cardholder fees would "rise by up to £11 for debit cards and £25 for credit cards".

The report by consultancy Europe Economics was produced with academics at the University of Essex.

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It also said similar changes were made in Australia and Spain in 2003 and 2005 and that card fees were increased and interest rates rose.

The issue of banking costs are particularly sensitive in the UK because of the popularity of "free banking". Most Europeans pay a monthly or annual fee for basic banking functions but Britons largely pay nothing, with the cost covered by the banks imposing higher charges on overdrafts and penalty fees elsewhere.

The report also warned that the change risked impeding the recovery in bank lending.

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