Saturday

24th Feb 2018

EU commission takes aim at credit card fees

Mastercard was in the EU's line of fire on Wednesday (24 July), after the bloc's internal market chief accused the credit-card giant of waging a "mad" lobbying campaign against plans to cap fees for using credit and debit cards.

Unveiling proposals that would cap charges for card payments to 0.2 percent and 0.3 percent for debit and credit cards respectively, Michel Barnier said Mastercard had mounted a campaign of disinformation against the proposals and him personally in the French media.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

  • Visa and Mastercard dominate the EU's €130 billion payments market (Photo: MyTudut)

"I can understand why a big American company would want to defend their interests… but I found their campaign quite counterproductive and unacceptable," he said.

The new regime could be worth up to €6 billion each year in cost-savings for retailers, and should translate into lower consumer prices, according to the EU commission.

Meanwhile, banning retailers from imposing extra charges for using their card would also save consumers €730 million annually.

Whenever someone pays for something by card, the retailer's bank pays a interchange fee, often up to 2 percent of the purchase price, to the bank used by the cardholder's bank.

The EU payments market, which is dominated by Visa Europe and Mastercard, is worth €130 billion per year, over 1 percent of the bloc's GDP.

The commission proposal also includes provisions for a legal split between payment card systems and the companies that process transactions, a move it claims would boost competition.

The EU is hoping that the legislation will bring an end to years of anti-trust proceedings against Visa and Mastercard in an attempt to force them to lower fees.

EU competition commissioner Joaquin Almunia commented that consumers were actively "encouraged to use the cards that generate the highest fees" and that consumers paying with cash were subsidising card users.

The likes of Poland and Hungary, where interchange fees are up to 1 percent, are expected to see the biggest drop in charges.

In statements responded to the proposals, Visa and Mastercard claimed that lowering interchange fees would lead to higher charges for owning credit cards, a charge rejected by the commissioners.

"Countries with the lowest MIFs (multilateral interchange fees) have more competition and lower costs," said Barnier. "MIFs are just a device to make money," he added.

 

For her part, Monique Goyens, director general of BEUC, welcomed the news commenting that "slashing the level of interchange fees should boost innovation and competition."

 

“That unfair surcharges are to become a thing of the past is good news. Companies have shamelessly used them to reap extra profit from people paying by card. Such practices rightly annoyed Europe’s consumers as they essentially punished them when making a payment,” she added.

Meanwhile, Ian Cheshire Group CEO of retail giant Kingfisher described the move as "a striking example of the European Union at its best: practically addressing a pan-European issue, empowering consumers and fostering growth".

The news pits MEPs and ministers in a race against time to reach agreement on the legislation before the end of the current term.

Barnier said it was "very difficult to predict" whether MEPs and member states would be able to strike a deal before next May's European elections. But he described governments as "generally" and the parliament as "definitely motivated" to reach a swift agreement.

If agreed by MEPs and ministers, the caps would apply first to cross-border payments, before entering into force for all domestic payments after a 22-month transition period.

Credit card company fears commission move

The European arm of the world's largest credit-card company has said banning transaction charges would harm consumers and destroy a European Union revamp of payment systems.

Credit cards often too expensive, Brussels says

Many European citizens and businesses are paying too much for using credit card systems like Visa and Mastercard because competition in the sector is being hampered, the European Commission has said.

Baltic states demand bigger EU budget

The leaders of Estonia, Latvia, and Lithuania say in a joint letter that they are open to talks on creating "new own resources" for a bigger EU budget after the UK leaves the EU.

Opinion

Greek government's steady steps to exit bailout programme

Growth predictions are positive, exports increasing, unemployment dropping and credit-ratings up, says the head of Greece's Syriza delegation to the European Parliament. Now the government in Athens is looking to design its own reform programme.

Analysis

We are not (yet) one people

Talks on the next EU budget will start on Friday. Brussels wants to do much more than before – and needs a lot more money. But arguing about funds won't be enough.

News in Brief

  1. EU calls for immediate ceasefire in Syria
  2. UK's post-Brexit vision is 'pure illusion', Tusk says
  3. EU leaders express solidarity with Cyprus in Turkey drill row
  4. EU to double funding for Sahel forces
  5. EU parliament president: 'The immigration problem is Africa'
  6. May to unveil EU departure strategy next week
  7. Pregnant workers may be dismissed, EU court rules
  8. Romanian minister demands anti-corruption prosecutor fired

Stakeholders' Highlights

  1. ILGA EuropeAnkara Ban on LGBTI Events Continues as Turkish Courts Reject NGO Appeals
  2. Aid & Trade LondonJoin Thousands of Stakeholders of the Global Aid Industry at Aid & Trade London
  3. Macedonian Human Rights Movement Int.European Free Alliance Joins MHRMI to End the Anti-Macedonian Name Negotiations
  4. Mission of China to the EUChina-EU Tourism Year to Promote Business and Mutual Ties
  5. European Jewish CongressAt “An End to Antisemitism!” Conference, Dr. Kantor Calls for Ambitious Solutions
  6. UNESDAA Year Ago UNESDA Members Pledged to Reduce Added Sugars in Soft Drinks by 10%
  7. International Partnership for Human RightsUzbekistan: Investigate Torture of Journalist
  8. CESICESI@Noon on ‘Digitalisation & Future of Work: Social Protection For All?’ - March 7
  9. UNICEFExecutive Director's Committment to Tackling Sexual Exploitation and Abuse of Children
  10. Nordic Council of MinistersState of the Nordic Region 2018: Facts, Figures and Rankings of the 74 Regions
  11. Mission of China to the EUDigital Economy Shaping China's Future, Over 30% of GDP
  12. Macedonian Human Rights Movement Int.Suing the Governments of Macedonia and Greece for Changing Macedonia's Name

Latest News

  1. EU agrees budget to focus on defence, security and migration
  2. EU leaders nix transnational lists, cool on 'Spitzenkandidat'
  3. Regions chief: calls for smaller EU budget are 'impossible'
  4. Election fever picks up This WEEK
  5. EU-Morocco fishing deal casts doubt on EU future foreign policy
  6. EU leaders put 'Spitzenkandidat' on summit menu
  7. European far-right political party risks collapse
  8. The key budget issues on EU leaders' table

Stakeholders' Highlights

  1. Swedish EnterprisesHarnessing Globalization- at What Cost? Keynote Speaker Commissioner Malmström
  2. European Friends of ArmeniaSave The Date 28/02: “Nagorno-Karabakh & the EU: 1988-2018”
  3. European Heart NetworkSmart CAP is Triple Win for Economy, Environment and Health
  4. European Free AlllianceEFA Joined the Protest in Aiacciu to Solicit a Dialogue After the Elections
  5. EPSUDrinking Water Directive Step Forward but Human Right to Water Not Recognized
  6. European Gaming & Betting AssociationGambling Operators File Data Protection Complaint Against Payment Block in Norway
  7. European Jewish CongressEJC Expresses Deep Concern Over Proposed Holocaust Law in Poland
  8. CECEConstruction Industry Gets Together to Discuss the Digital Revolution @ the EU Industry Days
  9. Mission of China to the EUChina-EU Relations in the New Era
  10. European Free AlllianceEnd Discrimination of European Minorities - Sign the Minority Safepack Initiative
  11. Centre Maurits Coppieters“Diversity Shouldn’t Be Only a Slogan” Lorant Vincze (Fuen) Warns European Commission
  12. Dialogue PlatformWhat Can Christians Learn from a Global Islamic Movement?