Yesterday's announcement that European Commission plans to cap fees on card payment limiting the interchange fee charged by banks to 0.2 percent on the value of a debit card transaction and 0.3 percent on credit cards. The cap, which is in line with measures demanded by the Commission's antitrust officials, will apply initially to cross-border transactions - for example, when an Irish card-holder uses their card in France.

A roll-out of the cap could begin from around the end of next year, after the conclusion of negotiations with the European Parliament and European Union countries.

After almost two years, this limit is to be extended to the interchange fees on domestic payments using all cards.

But:

• the plans only concern MasterCard and Visa, and not Amex at this stage
• retailers said the draft rules did not go far enough. Ruth Milligan of EuroCommerce, a retail lobby group that has campaigned for cuts in the charges, said the fee should reflect the "tiny" actual costs involved. "It should be a fixed fee," said Milligan. "There is no reason for it to be a percentage fee. Because the electronic system is already in place, it's a tiny cost, something like 1 cent per transaction."
• merchant and consumer groups say they have not been consulted
• the drop in credit card interchange is huge (60%)
• banks claim the current charges already reflect the costs, so consumers might have to pay an extra £11 a year on their debit cards, and £25 on their credit cards.

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This will take ages to sort out, don't expect much change in the merchant service charge you pay anytime soon. Furthermore, expect new charges to miraculously appear to wipe out any cut in interchange.