BRUSSELS, Belgium – On Tuesday, the European Parliament voted, by a 621 to 26 vote, in favor of capping payment card interchange fees for consumer payments.
The agreement between lawmakers and the European Union (EU) Council sets the caps at 0.2% for debit and 0.3% for credit transactions, and also set limits on Visa and MasterCard’s “Honor All Cards” rule. For consumer debit cards, the new rules also allow individual EU member states to set lower percentage caps and impose maximum fee amounts.
Not all forms of payment are covered by the new rules: Commercial payment cards that are used only to pay for business expenses are exempt from the caps, as are three-party card schemes like American Express and Diners Club. (After three years, the new regulations will also apply to three-party card schemes that license other parties to issue cards, so they’re effectively operating as four-party schemes.)
According to a statement by the European Commission, it is anticipated that the new rules could lead to a reduction of about 6 billion Euros (approximately $6.3 billion) each year in hidden fees for consumer cards. The Commission went on to praise the regulations for “giving more freedom of choice to retailers, enhancing transparency for card transactions, and paving the way for innovative payment technologies to be rolled out.”
In addition to limiting interchange fees, the regulation removes major obstacles to technological innovation in payment options. Technologies that allow consumers to pay with their debit or credit cards online or using mobile apps are readily available. However, uncertainty on the rules regarding interchange fees has been one of the factors holding up the use of these technologies.
Commissioner Margrethe Vestager, in charge of competition policy, said in a statement: "For too long, uncompetitive and hidden bank interchange fees have increased costs of merchants and consumers. Today's vote has brought us another step closer to putting an end to this. … It is good for consumers, good for business and good for innovation and growth in Europe.”
The new rules must still be approved by the EU Council, which is expected to do so by this summer.
For more global industry insights, consider attending the NACS Insight Convenience Summit – Europe from June 7 to 12. At the Summit, convenience and fuel retailing professionals from around the world will gather in Berlin and London for knowledge gathering, commercial connections and networking, and the opportunity to discover and discuss new ideas from retail store tours. For more information, visit NACS Online.