Saturday

25th Mar 2017

MEPs back cap on credit card fees

  • MEPs backed a cap on card payment fees, but Mastercard says retailers will not pass the benefits to customers (Photo: YayAdrian)

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.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

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.

Column / Brexit Briefing

The Union under threat

The effect of Brexit will be much more profound on Northern Ireland than on Scotland. Some kind of border controls with Ireland seem inevitable.

Bulgaria's election test

Sunday's general elections will be a test for the country's relations with the EU, Russia, and Turkey, as well as for the political future of former leader Borisov.

Stakeholders' Highlights

  1. European Gaming & Betting Association60 Years Rome Treaty – 60 Years Building an Internal Market
  2. Malta EU 2017New EU Rules to Prevent Terrorism and Give More Rights to Victims Approved
  3. European Jewish Congress"Extremists Still Have Ability and Motivation to Murder in Europe" Says EJC President
  4. European Gaming & Betting AssociationAudiovisual Media Services Directive to Exclude Minors from Gambling Ads
  5. ILGA-EuropeTime for a Reality Check on International Day for the Elimination of Racial Discrimination
  6. UNICEFHuman Cost to Refugee and Migrant Children Mounts Up One Year After EU-Turkey Deal
  7. Malta EU 2017Council Adopts New Rules to Improve Safety of Medical Devices
  8. Nordic Council of MinistersNordic Energy Research: How to Reach 100 Percent Renewable Energy
  9. Party of European SocialistsWe Must Renew Europe for All Europeans
  10. MEP Tomáš ZdechovskýThe European Commission Has Failed in Its Fight Against Food Waste
  11. ILGA-EuropeEP Recognises Discrimination Faced by Trans & Intersex People
  12. Nordic Council of Ministers25 Nordic Bioeconomy Cases for Sustainable Change