The European Commission has proposed new rules that would cap fees charged by banks for the use of credit and debit cards.

The Commission has long sought to rein in the fees with EU officials, arguing the charges push up prices in the shops.

The proposals announced today would see fees ultimately capped at 0.2% of the value of the transaction for debit cards and 0.3% for credit cards.

The caps would be phased in over a 22 month period, beginning with cross-border transactions and eventually being applied to domestic transactions.

The proposals require the backing of EU member states and the European Parliament before they can become law.

Banks have already voiced their opposition to the proposals, arguing that the restriction may force them to introduce annual fees for card users.

Card companies claim the fees are necessary to cover costs, including those related to the security of transactions.