On Wednesday, December 17, the European Parliament (ECON Committee) and the Council agreed on the proposal for capping card transaction fees. This agreement is of a political nature, the legal text still has to be formally approved by both institutions early in 2015. The text will then be voted on by the full Parliament.
Card transaction fees are charged to retailers for processing shoppers’ payments generating multibillion-euro revenue for European banks.
The Commission has welcomed the alignment: “This legislation is good for consumers, good for business, and good for Europe. It will lead to lower prices and visibility of costs for consumers. It reduces a 'tax' levied on business by banks in the form of interchange fees, and releases the brakes that have so far held back innovation,” said Margrethe Vestager, Competition Commissioner.
As things are, retailers pay fees that can reach up to 1.8% of the transaction, the burden of which is then passed over onto consumers who are often not aware of this practice. The draft proposal aims to cap the fees at 0.2 per cent for debit card rates and 0.3 per cent for credit cards.
“A cap on credit and debit card payments will make transactions significantly cheaper. We now expect retailers to stick to their promises to pass on cost savings to consumers by lowering product prices,” noted Monique Goyens, Director General of The European Consumer Organisation (BEUC).
The caps will apply six months after the legislation enters into force. Exempted are three-party card schemes such as Diners and American Express (involving only one bank) provided the card is both issued and processed within the same scheme. Commercial cards used only for business expenses would also be exempt from the new rules.
Find a press release with our position on Card transaction fees here.