Caps on inter-bank fees for card payments good for consumers, good for retailers
It's taken a long time, but the European Parliament and the Council have finally agreed a deal on a regulation to cap interchange fees for card-based payments.
Consumers are not often aware of these inter-bank fees. But they are estimated to cost retailers and ultimately consumers some tens of billions of euros every year.
Up to now, their level has varied widely between EU Member States, which has been seen as creating barriers to the EU's internal market.
Under the new rules, which will apply from 6 months after entry into force of the new regulation, maximum fees of up to 0.3% of the value of a transaction will apply.
At the moment, consumers are in effect 'paying for paying' with cards through these hidden fees. Retailers then pass these costs on to consumers, all of which leads to higher prices. Neither retailers nor consumers are able to influence these fees.
The European Court of Justice, in its MasterCard judgement of 11 September, made clear that such interchange fees violate EU antitrust rules.
Besides capping fees and increasing transparency, the Regulation also removes obstacles to technological innovation. Technologies are already available which which allow online, mobile and person-to-person transactions on the basis of card payments. But uncertainty on permissible interchange fees and business rules has up to now held up its roll-out to EU consumers.
The Regulation will now help to provide legal certainty to the industry and a level playing field for all payment providers.
So this legislation will be welcomed by many. It reduces costs for retailers and for consumers, and it should lead to lower prices and real transparency for consumers. It will also be a boost to the development of fast, convenient and user-friendly payment technologies.
