New commitments on foreign cards only a small step, but fails to create an online/offline playing field

04 December 2018
by eub2 -- last modified 04 December 2018

Retailers and wholesalers today welcomed the announcement that Visa and Mastercard have made commitments to bring transactions on cards issued outside the EU (non-EU visitors purchasing within the EU) broadly in line with those EU-issued cards.

Christian Verschueren, Director-General of EuroCommerce, said: "We have been pressing for some years for the removal of the often very large difference between what a merchant is charged for accepting a card issued in the EU and one from outside. These changes are a welcome step forward, and will help shops and others gain more transparency than hitherto, where they only knew exactly how much they would be charged when the bill arrived".

The agreement to cap fees on cards issued outside the EU to the same rates as for cards issued in the EU (maximum 0.2% for debit, 0.3% for credit cards) removes a difference which caused merchants real difficulties, and uncertainty about the fees they would be charged. We have argued consistently that these differences were not justified.

The tightening of the Non-Circumvention clause to include programs or the introduction of new rules or fee increases (including scheme or other fees) charged to acquirers is also a valuable step forward, but it would have been useful if this had gone further than just applying in the EEA to non-EEA issuers. This is a point which we hope that the Commission will look at in reviewing the MIF Regulation.

Where the commitments fall short is the distinction they make between a transaction where the cardholder is present and where the card is used online or over the telephone. The substantial difference in rates (1.15% for debit, and 1.5% for credit cards) for these transactions is not easy to justify. No such distinction is made for cards issued in the EU. This is important in supporting the growth of online sales and e-commerce. We therefore cannot understand why merchants should be charged more for a perceived risk which can only arise in the by the card issuers' failure to implement adequate fraud prevention measures.

These commitments last five years and six months. Verschueren added: "The commitments given will be helpful, and we are glad that the Commission and card schemes have reached this agreement. But it is only a first step away from a situation where fees for non-EU cards were totally non-transparent and far too high. We ask that, as part of the review of the Regulation currently under way, the Commission to propose a full alignment of these fees with those for cards issued in the EU, and whether purchases are made in a store or online. We also ask to include commercial cards in the scope of the Regulation."

EuroCommerce is the voice for six million retail, wholesale, and other trading companies. Its members include national commerce federations in 31 countries, Europe's 27 leading retail and wholesale companies, and federations representing specific sectors of commerce.

EuroCommerce