On 24 July 2013, the European Commission submitted a proposal for a Regulation on Multilateral Interchange Fees (MFIs), “the fees that banks charge retailers for processing shoppers’ payments”. This year in April, the European Parliament voted in favour of amendments to the proposal, capping interchange fees at 0.2% of transaction value for debit cards and 0.3% for credit cards.
On Wednesday 19th November, trialogue meetings (negotiations attended by representatives of the European Parliament, the Council and the Commission) started. The Council has come up with the following changes which can be a tipping point in the reach of an agreement:
1) The inclusion of four party schemes, e.g. Visa or MasterCard that have a separate issuer and acquirer (the acquirer pays the issuer an interchange fee, and the merchant pays the acquirer a service fee) will remain compulsory. However, the inclusion of third party schemes, e.g. American Express (the issuer of the card to the consumer and the acquirer, who has the relationship with the merchant, is the same body) will be up to the Member states.
2) Instead of having a cap of 0.2% on individual debit card payments, the Council suggests that the 0.2% could represent a weighted average of all payments made during the year.
Pablo Zalba Bidegain, MEP rapporteur on the proposal, stressed the importance of continuing working together on “balanced solutions to these two conflicts” ahead the next trialogue meeting on December 4th. “Mr. Zalba Bidegain also showed the EP's commitment “to find the best possible outcome in benefit of the European economy, particularly for consumers”.
BETTER FINANCE would like to stress that it is necessary to ensure that the capping of interchange fees does not result in undesirable rises on payment card fees for consumers with financial institutions and/or merchants retaining the benefits of the proposed regulations for themselves instead of passing them on to credit card users. Find our position here.
To better understand how Multilateral Interchange Fees work, please consult this BEUC Factsheet.