EU Cap on Card Transaction Fees Moves Closer

A cap on fees for bank card payments across the European Union (EU) moved closer after the European Parliament (EP) approved the proposed measure.

Members voted 621-26 for a limit of 0.2% on a transaction’s value for debit cards and 0.3% for credit cards, with the restriction to eventually apply for both cross-border and domestic transactions. If the measure wins final approval from the EU’s 28 governments, the new rules could be introduced as early as September.

The proposed cap has been the subject of debate in the EU for several years, due partly to a lack of consensus over whether consumers will benefit.

A particularly contentious issue has been that of so-called interchange fees, which banks pay each other to process payments made with debit and credit cards and which help finance card payment systems.

“This legislation will put a cap on interchange fees, make them more transparent and remove a hurdle to rolling out innovative payment technologies,” stated EU competition commissioner Margrethe Vestager. “It is good for consumers, good for business and good for innovation and growth.”

“Merchants will see the costs of payments fall, which should, in turn, drive down prices for consumers,” added EU financial services commissioner Jonathan Hill.

Supporters of the cap have argued that current card fees are inconsistent and too high, hinder competition in the bloc and lead merchants to charge consumers more for their products.

The European Commission (EC) estimates that the new measure could cut around €6bn annually in hidden card fees.

However, critics of the measure believe that consumers will not receive any benefit, either because banks will charge card users more to keep the payment systems running or because businesses will not pass on the savings to their clients.


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