EU: Parliament, Member States reach swipe-fee cap deal

The European Parliament and governments of EU Member States have reached a deal on where to cap debit and credit card interchange fees, a move Parliament hopes will reduce consumer costs.

Reports say governments reached an agreement with Parliament’s economic committee late Wednesday to cap credit card processing fees at 0.3 percent, cross-border debit card fees at 0.2 percent, and domestic debit card fees at 0.2 percent of the annual average transaction value of all domestic transactions within the card scheme.

Card companies like Visa and MasterCard, along with so-called four party schemes in which the card-issuing bank, the retailer, the retailer’s bank and the card user, will all be affected by the fee caps. The price caps will not initially affect three-party schemes in which only one bank is involved.

The agreement also ends the Honor All Cards rule, meaning retailers will be able to choose which cards they accept.

European competition chief Margrethe Vestager says the new legislation “is good for consumers, good for business, and good for Europe. It will lead to lower prices and visibility of costs for consumers.”

But while Visa says it welcomes the transparency of card fees, the company does not necessarily agree consumers will benefit from the legislation. In a statement, the company says it continues “to have serious concerns that the regulation will have unintended consequences, particularly for consumers, and that it could stifle future innovation.” The company argues that the caps offer no guarantee that savings will be passed on to consumers, and that the end of the Honor All Cards rule may cause confusion and uncertainty among consumers as to whether their card will be accepted at a retailer.

According to reports, the new swipe-fee caps will be implemented six months after the laws go into effect. The legislation will still need to pass a full Parliamentary vote next year.

The agreement comes as individual EU states investigate interchange fees and other aspects of the carts industry.

Full content: Reuters

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