EU launches plan to cap credit-card fees
The European Commission launched draft legislation Wednesday to cap banking fees on credit and debit cards for consumers, blamed for hiking prices.
The proposals by the EU executive would apply a 0.3-percent ceiling on credit-card interchange fees and a 0.2-percent limit on debit-card fees, as well as electronic and mobile payments, officials said.
These fees are paid by the banks involved in a card transaction and are then charged to the retailer. The Commission believes fees paid by businesses are then passed on to consumers.
The caps will initially only apply to cross-border, consumer transactions and only after two years in operation, to domestic payments.
The legislation foresees a review to check that benefits are being passed back to consumers after four years.
Commission data suggests the caps would almost halve the total fees levied, which vary widely between member states. It says combined savings could run to 730 million euros ($965 million) each year.
The EU has long fought with credit card operators such as MasterCard and Visa Europe on the issue, taking action on grounds of anti-competitive behaviour.
Commission legislative proposals require the backing of EU member states and the European Parliament before they can become law.
Internal Market Commissioner Michel Barnier told a press conference he believed the necessary approvals could be secured by March next year.
The plans would outlaw what the Commission said would amount to 95 percent of extra fees levied by certain retailers, notably online for low-cost flights.
The goal is to create a level playing field for card, internet and mobile payments, but not all cards are covered on these extra fees -- exceptions including American Express and Diners.
Consumer bodies backed the plans, but Barnier hit out at Mastercard for what he called an "outrageous" lobbying campaign.
Mastercard argued Wednesday that the effects of the proposals could harm small merchants and inconvenience consumers.
rt/arp
