An EU proposal that should cut the cost of credit and debit card payments for retailers has been welcomed by the Association of Convenience Stores (ACS).

The EU intends to limit the ‘interchange fees’ charged by banks to card providers such as Visa and Mastercard to 0.2% on debit card and 0.3% on credit cards. This will initially be on cross-border transactions within the EU, then after a 22-month transitional period on domestic transactions as well.

The regulation would also ban rules that prevent retailers from choosing to accept debit cards but not credit cards issued by the same scheme; or from incentivising customers to pay by card types that attract lower merchant fees.

ACS chief executive James Lowman said: “This is an important breakthrough. Retailers are faced with a card payment market that is complex and lacking in transparency. The cost of card charges significantly reduces retailer profitability and undermines their ability to invest in their business or in lower prices for customers.

“This is already a significant problem for forecourt convenience retailers that are the most reliant on card-based transactions.

“However there is still a long time to go before these rules will be in force and so we encourage the UK Government to press ahead quickly with the creation of a dedicated regulator for the payments industry to expose and regulate practices that are impacting on retailers and consumers.”

The ACS pointed out that interchange fees are the charges paid to banks by the payment card scheme. They are not the fees charged by the card scheme to the merchant. However the interchange fee is an important component part of current merchant fees.