The Government has today confirmed plans to cap the fees card firms charge retailers to process transactions, which could spell the end for cashback and reward card deals.
From 9 December 2015, the so called 'interchange fees' card firms can charge will be capped at 0.3% for UK credit card transactions, and an average of 0.2% for UK debit card transactions.
These fees are often unseen by consumers, but ultimately we all pay for them as retailers include them in the prices they charge for goods and services.
The European Parliament, which voted in favour of this initiative, hopes the cap will result in lower costs for both retailers and shoppers.
But a number of major providers, including Capital One, RBS and Tesco Bank have already scaled down cashback and loyalty point schemes, citing the forthcoming caps as the reason why – something MoneySavingExpert.com has previously warned about.
The only card firms exempt from this rule are 'third party' card schemes such as American Express (Amex), which operates differently, and third-party card schemes that licence other parties to issue cards, for example Amex licences MBNA and other providers to issue its cards (provided these schemes have less than a 3% market share).
After three years, the rules will apply to third-party card schemes that licence other parties to issue cards, although the Government says it can "revisit" this exemption within the three year period "should it deem it appropriate to do so".