The Treasury hopes the change will push prices down for shoppers and encourage more businesses to allow card payments.
Businesses are set to save millions as a cap on credit and debit card transaction fees comes into force.
The EU has imposed a limit on how much card companies can charge retailers to use electronic payment systems.
The Treasury says the cap is designed to push prices down for consumers.
When shoppers in the UK use debit or credit cards, a percentage of the purchase price is paid by the retailer to the card company.
From today, fees on credit card transactions will be capped at 0.30%, well below the average of 0.85%.
Debit card fees will be limited to 0.20% of the transaction value. The current average is about 0.21%.
According to the European Commission, interchange fees amount to £1bn per year in the UK, although some estimates are double that figure.
The British Retail Consortium believes the cap could save British businesses up to £480m a year.
But there is concern that card companies will recoup their costs in other ways.
Nick Frankcom, a banking expert at uSwitch, said: “One of the unfortunate effects of this is that many card companies are now cutting reward schemes and cashback schemes that many of us rely on for that little bit extra from our spend.”
A cashless society is quickly becoming a reality and the cap – which the Prime Minister’s EU Business Taskforce pushed for – may encourage more places to allow card payments.
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