EU countries might retain power to set certain card fees in draft bill

31 January 2017 9:55am

8 September 2014. By John Rega and Lewis Crofts.

EU countries could tighten national caps on card-transaction fees but wouldn’t be bound by a lower limit pushed by the European Parliament, under a compromise governments are considering.

EU legislators are weighing a bill to set a maximum on the fees banks collect when their customers use MasterCard, Visa Europe and other payment cards in the region. Tomorrow, negotiators for national governments plan to debate a draft of amendments, obtained in advance by MLex.

The European Commission proposed the draft law in July 2013, suggesting the charges on payment-card transactions — known as “interchange fees” — should be capped at 0.2 percent of the value of a purchase for debit cards and 0.3 percent for credit cards. The fees are paid from the retailer’s bank to the cardholder’s to cover the cost of electronic payments.

Card networks and banks have warned against the caps, saying they will harm the rollout of new payment methods. National governments and the European Parliament must agree on the law before it can come into force.

The parliament set its official stance in April, tightening the proposed caps with a seven-cent fee limit for debit-card purchases. Lawmakers also said cards destined for corporate use — which typically have higher fees — should be subject to caps.

Representatives of the EU’s 28 national governments are in talks over further changes to the bill, under the chairmanship of Italy, which holds the EU’s rotating presidency until the end of the year.

A text prepared by Italian officials for tomorrow’s meeting of national negotiators would let governments adopt the seven-cent cap, but wouldn’t require them to do so.

The latest text also leaves intact the proposed method for computing the percentage cap. A prior memo circulated to negotiators had suggested that the rate could be revamped as a weighted average over a period of time, rather than a hard ceiling on each individual swipe. But governments have further negotiations
to come.

The governments could also tone down a commission proposal to split the operation of a card-payment network from the processing of transactions, to allow for competition from other payment services. That goal could be met by requiring card networks to have an organizational wall between the two, and separate accounts, without a difference in ownership, according to the Italian text.

Fintech Regulation in 2018