Credit card bills force price hikes
Credit and debit card fees are pushing up high street prices by about 2.5%, the European Commission has claimed. But what can be done to bring the charges down? asks Andrew Partridge.
The EU Competition Commission has called for action to tackle credit and debit card fees, after it said the companies’ charges were pushing up prices by as much as 2.5 per cent.
It blamed card acceptance fees for the price surges, as it said the fees were effectively a “tax” on sales at business outlets, as banks charge retailers a fee for every use of a payment card.
It added that smaller firms often also ended up paying higher fees than larger companies, and the Commission said this was not justified by transaction costs.
If the EU is correct shoppers would be paying an extra 25p for every £10 they spent, simply because of the charges, and this would be sure to anger many consumers across Europe. Yet the EU Commission is fighting the consumer’s corner, as it is trying to tackle the problem.
The EU blames a lack of competition in the European payment industry for the high charges and it said it was to address these barriers to competition to resolve the issue.
Competition Commissioner Neelie Kroes said: “The payment cards industry in Europe remains national and some local players are preventing competition from developing. This pushes up payment card costs for consumers and businesses. Competition law and sector regulation must work together to create a better environment for business.”
To encourage competition, the EU urged action to allow more firms to compete in the payments market, and to encourage banks to compete when going to retailers.
The EU has also told credit card companies to cut their penalty fees. The EU warned that if the companies breached EU regulations, they could be fined.
This news comes just a week after the UK’s Office of Fair Trading told card companies in the UK to reduce the charges they passed onto consumers, and adds further pressure on the industry to cut its prices.