Generous credit and debit card rewards schemes took a step closer to disappearing today as the Payment Systems Regulator set out how the new cap on fees plastic card companies can charge retailers will be policed.
The cap will be introduced next Wednesday 9 December and is likely to led to increased charges for consumers with many plastic card company already cutting back on expensive cashback or reward schemes.
For instance Tesco slashed its reward scheme for Clubcard credit card users from yesterday following similar changes for its World credit card customers last month. RBS scrapped its Your Points scheme in July, hitting a million NatWest and RBS customers while Capital One cut cashback on its card in June.
However the regulator said the new Interchange Fee Regulation could open the door to new credit card providers entering the market as it will “boost transparency and remove barriers”. It is consulting the industry on its new regulatory guidance until the end of January.
The fee will be capped at 0.3 per cent for credit card transactions and 0.2 per cent on debit card transactions.
These fees are paid by retailers to card issuers when a debit or credit card is used as payment. The fee can be as much as 1.5 per cent for some transactions and, in enforcing the cap, the European Commission claimed the charges were costing retailers across the eurozone £6.5bn a year.
