The fees that banks charge retailers to process shoppers’ payments will be capped, following a vote Tuesday in the European Parliament (EP).
Under new EU-wide rules, the cap will apply to both cross-border and domestic card payments.
For cross-border debit card transactions, the agreed cap is 0.2 percent of the transaction value. The same 0.2 percent cap will apply to domestic debit card transactions after a five-year transition period in which European Union (EU) states can cap fees at 0.2 percent of the “annual weighted average transaction value of all domestic transactions within the card scheme.”
Interchange fees for card-based payments, which are paid by the retailer’s bank to the bank that issued the card, are currently not transparent and differ among EU countries. In some cases they are subject to legislation, while in others they are decided by national competition authorities.
Members of the European Parliament (MEPs) hope the new limits will lower the cost of using cards for purchases.
“This legislation, combined with the upcoming payment services directive, will establish a level playing field for payments across Europe,” said Spanish MEP Pablo Zalba, who steered the proposal through parliament.
“It should enhance fee transparency, stimulate competition and enable both retailers and users to choose the card schemes that offer them the best terms,” he added.
For smaller domestic debit card transactions, member states can also set a maximum fixed fee of 5 euro cents (5.3 U.S. cents) per transaction, after the five-year transition period.
Credit card transactions fees will be capped at 0.3 percent of transaction value and member states can set a lower fee cap for domestic credit card use.
The new rules will not apply to the so-called “three-party” card schemes, such as Diners and American Express, provided the card is both issued and processed within the same scheme. Commercial cards used only to pay business expenses will also be exempt.
The capping rules also do not affect ATM cash withdrawals. Enditem