MEPs back cap on credit card fees
21.02.14 @ 09:24
BRUSSELS - MEPs have backed plans to cap card payment fees charged to shops by credit card giants Mastercard and Visa in a move aimed at saving €6 billion per year.
In a vote of the parliament's economic affairs committee on Thursday (20 February), deputies backed a proposal to limit the bank’s fee for credit card payments at 0.3 percent of the transaction value.
They also set a cap of €0.07, or 0.2 percent of the transaction value, for debit card payments. The restrictions are to enter into force after one year and apply to both domestic and cross-border payments.
Retailers are required to pay the charges whenever they process debit or credit card payments, and have argued for years that Mastercard and Visa use their dominant market position to charge exorbitant fees, which are then passed on to consumers.
At present, average fees range from around 0.2 percent in Denmark and the Netherlands, to over 1 percent in Germany, Hungary, and Poland.
The European Commission says the new regime could be worth up to €6 billion in savings each year for retailers, and lead to lower consumer prices.
“These unregulated and unjustifiably high card fees only benefit banks and card companies," said Monique Goyens, director general of the Brussels-based European consumer group BEUC, in a statement after the vote.
"As banks cherish this income, they have no interest in letting cheaper card services or innovative payment players enter the market. Capping these fees by 0.3 percent and 0.2 percent of the transaction amount for credit and debit cards will bring down the cost of making payments significantly,” she added.
Ian Cheshire, the chief executive of the British-based home-improvement retailer Kingfisher, also welcomed the vote, commenting that "reform of interchange fees is finally heading in the right direction and retailers, hard-pressed consumers and small and medium enterprises are set to benefit."
For its part, however, Mastercard says that a "one size fits all" cap would benefit shops but not consumers.
"The setting of a strict ceiling on interchange rates is not based on any clear data or methodology," it said in a statement.
"It ignores the very different market realities between countries, and most importantly, it is likely to drive the cost of cards up for consumers and small merchants."
MEPs also decided to scrap the "honour all cards" rule, under which retailers are often obliged to accept all cards in any given card scheme.
However, with just two months until the EU institutions close for business ahead of May's European elections, MEPs and ministers are not expected to begin negotiations on the final shape of the bill until the new parliament reconvenes after summer.
Parliament sources indicated that MEPs plan to vote in April to finalise their negotiating stance, but expect no further progress before the May vote.