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Credit card fee caps could save £700m

By Vicky Shaw

A cap on the fees that banks charge businesses to process credit card payments could save UK retailers up to £700m a year, the government has said.

The new rules, which are part of regulations agreed by the European Union earlier this year, introduce a Europe-wide cap on the charges that a business has to pay when a customer makes a card payment.

From December 9, the fees banks can charge will be capped at 0.3% for credit card transactions and at an average of 0.2% for domestic debit card transactions.

Nearly 10.7 billion credit and debit transactions took place across Britain in 2013.

The Government said it expected businesses to pass the savings on to consumers in the form of lower prices.

The EU is also close to finalising a revision of the Payment Services Directive, to prevent businesses from making money from customers who have chosen to pay by card.

Economic Secretary to the Treasury, Harriett Baldwin, said: "We are determined to tackle the unfair fees that Britain's businesses are often charged when their customers pay by card - fees which are often passed on to consumers."

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