Consumers and retailers should benefit from new European Union rules that will cap the fees banks charge retailers to process shoppers' payments across the EU.

The European Parliament this week voted in favour of capping the fees for both debit and credit card transactions. The bill was passed with 621 votes for, 26 against, and 29 abstentions.

As a general rule, the regulation will cap fees at 0.2% of the transaction value for debit cards, and at 0.3% for credit cards.

The EU Commission estimates that the rules could lead to a reduction of about €6bn annually in fees for consumer cards.

Retailers are charged for every card transaction and add the costs to the price. It is hoped the reduced fees will lead to lower prices for goods and services.

It follows an agreement reached with EU governments in favour of the cap in December. The cap will apply to both cross-border and domestic card payments.

The legal text voted on by the Parliament still needs to be formally approved by the European Council, which is expected to happen before the summer.

Sinn Fein MEP Matt Carthy says the new law, which will come into force next year, is good news for both retailers and consumers.