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EU: Experts say proposed swipe-fee caps have no guarantees of working

By  |  October 15, 2013

The proposed overhauls to EU’s payments regulation, which include a cap on swipe-fees, may not work as intended, according to some experts.

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    In an article penned by competition law experts Alan Davis and Jenny Block, the authors say the European Commission’s overhauls – meant to jumpstart competition in the payments industry and promote innovate – will likely lead to higher costs for merchants’ banks and cannot guarantee that benefits of capped interchange fees will be passed on to customers.

    Interchange fees are charged by banks to stores every time a consumer pays with a certain type of debit or credit card. It’s a controversial topic currently being debated in several nations, including the US.

    Further, say critics, the EU’s timetable to implement such reforms is “unrealistic” and one that “carries significant risks in terms of costs, as well as the rick of implementation failure and unintended consequences.”

    The Commission first offered the proposed overhauls last July in its Multilateral Interchange Fees Regulation draft.

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