Sunday

22nd Apr 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.

Macron and Merkel pledge euro reform

France and Germany have pledged to forge a joint position on euro reform by June, despite German reluctance on deeper monetary union.

News in Brief

  1. Audit office: Brexit 'divorce' bill could be billions higher
  2. MEPs urge better protection for journalists
  3. Dieselgate: MEPs back greater role for EU in car approvals
  4. European parliament adopts new organic farming rules
  5. EU granted protection to half million people in 2017
  6. Report: Facebook to carve 1.5bn users out of EU privacy law
  7. Greek court ruling permits migrants to travel to mainland
  8. Commonwealth summit hopes for trade boost after Brexit

Stakeholders' Highlights

  1. Nordic Council of MinistersWorld's Energy Ministers to Meet in Oresund in May to Discuss Green Energy
  2. ILGA EuropeParabéns! Portugal Votes to Respect the Rights of Trans and Intersex People
  3. Mission of China to the EUJobs, Energy, Steel: Government Work Report Sets China's Targets
  4. Martens CentreJoin Us at NET@WORK2018 Featuring Debates on Migration, Foreign Policy, Populism & Disinformation
  5. European Jewish CongressKantor Center Annual Report on Antisemitism Worldwide - The Year the Mask Came Off
  6. UNICEFCalls for the Protection of Children in the Gaza Strip
  7. Mission of China to the EUForeign Minister Wang Yi Highlights Importance of China-EU Relations
  8. Nordic Council of MinistersImmigration and Integration in the Nordic Region - Getting the Facts Straight
  9. Macedonian Human Rights MovementMacedonians in Bulgaria Demand to End the Anti-Macedonian Name Negotiations
  10. Counter BalanceThe EIB Needs to Lead by Example on Tax Justice
  11. ILGA EuropeTrans People in Sweden to be Paid Compensation for Forced Sterilisation
  12. International Partnership for Human RightsThe Danger of Standing Up for Justice and Rights in Central Asia

Latest News

  1. ECJ ruling set to end 10-year 'mouth tobacco' lobbying saga
  2. Whistleblowers, Syria and digital revolution This WEEK
  3. MEP friendship groups offer 'backdoor' for pariah regimes
  4. Macron and Merkel pledge euro reform
  5. Obscurity surrounds EU military fund's expert groups
  6. New EU party finance rules short circuit accountability
  7. Draghi to stay in secretive 'lobby' group
  8. Bulgaria offers lesson in tackling radical-right populists

Stakeholders' Highlights

  1. Mission of China to the EUChina and EU Must Work Together to Promote Global Steel Sector
  2. Swedish EnterprisesEU Tax Proposal on Digital Services Causes Concern for Small Exporting Economies
  3. Europea Jewish CongressCondemns the Horrific Murder of Holocaust Survivor Mireille Knoll in Paris
  4. Mission of China to the EUAn Open China Will Foster a World-Class Business Environment
  5. ECR GroupAn Opportunity to Help Shape a Better Future for Europe
  6. Counter BalanceControversial Turkish Azerbaijani Gas Pipeline Gets Major EU Loan
  7. World VisionSyria’s Children ‘At Risk of Never Fully Recovering', New Study Finds
  8. Macedonian Human Rights MovementMeets with US Congress Member to Denounce Anti-Macedonian Name Negotiations
  9. Martens CentreEuropean Defence Union: Time to Aim High?
  10. UNESDAWatch UNESDA’s President Toast Its 60th Anniversary Year
  11. AJC Transatlantic InstituteAJC Condemns MEP Ana Gomes’s Anti-Semitic Remark, Calls for Disciplinary Action
  12. EPSUEU Commissioners Deny 9.8 Million Workers Legal Minimum Standards on Information Rights