The PRA has cautioned that the consequences of a European Parliament vote to limit the fees charged to retailers by banks and other financial institutions to process their debit and credit card transactions, may not be as straight forward as it sounds.
Tax expert Gordon Balmer, commercial manager at the PRA, said: “This is a step in the right direction and we await the details of the European Court ruling and how merchant acquirers interpret it. It must also be remembered that the cap only applies to the interchange element of the card charges and not the charges that the merchant actually pays the acquirer, hence the full impact of the announcement yesterday cannot be judged at the moment.
“We have some concerns that a move towards an ad-valorem [value-based] means of calculating debit card costs could, if average transaction values increase, end up costing the retailer more than the previous pence per transaction basis of calculation.
“In addition the new methodology could also call into question the on-going viability of retailers providing “cash back” to their customers. To obtain further detail on this and how this will affect credit cards the PRA has requested a meeting with the Payments Service Regulator.”
MEPs voted in favour of the deal by a margin of 621 to 26. The cap applies to both cross-border and domestic card-based payments, which cost businesses across the EU around €10bn a year. The text must be approved by the European Council, and the regulations are likely to come into force by autumn 2015.