Out-Law News | 04 Apr 2014 | 1:16 pm | 2 min. read
The proposal would cap interchange fees at 0.3% of credit card transaction values. For debit cards the fee would be capped at either €0.07 or 0.2% of the transaction value, whichever is lower. The caps would apply to both EU cross-border transactions and those which take place within member states.
Under the proposals third party online payment providers would also have to disclose the actual cost of processing payments, on request. MEPs also called for caps on payment charges to be included in changes to card payment rules.
In a separate vote on the same day, proposals including a number of measures designed to improve online payment security were also adopted by the Parliament.
Under these proposals, online payment service users would receive a uniform set of information detailing clearly all charges, execution times, contact information, and any exchange rates which applied to the transaction. Unauthorised payments would have to be refunded within 24 hours of being noticed. But cardholders might also be liable to pay up to €50 losses resulting from the illegal use of a lost or stolen payment card or device.
According to the European Commission, bank card payment fees cost EU retailers more than €10 billion annually. Although banks charge retailers, the Commission believes that retailers pass most of the charges onto the consumer, resulting in higher prices.
"These fees are not clear to card users," said a statement by the Parliament following the vote. "They also differ between EU member states, because they are fixed not by law but by national competition authorities. Retailers are charged for every card transaction and add the costs to the prices of goods or services they sell."
Speaking ahead of the vote, Pablo Zalba, a Spanish member of the EPP group, who is responsible for steering the plans through Parliament, said consumers could save "hundreds of millions or even billions of euros" with capped fees, thanks to savings passed on by retailers paying lower charges.
Responding to the vote, Richard Koch, head of policy at the UK Cards Association, said: "The interchange fee ensures that retailers make a fair contribution to the operation of the card payments system, in return for which they benefit through guaranteed payments, security from fraud and the ability to accept payments online. The effects of these proposals are likely to mean a card payments system which, in the future, looks and feels very different, with potentially less to invest in fraud prevention, innovation and competitive offers to consumers. We are calling on the UK Government and EU policy-makers to ensure that a balance is struck where all parties who benefit from the card payments system pay a fair proportion for its operation."
The proposals are due to return before the Parliament again after the summer break.