EU Parliament Passes Cap on Credit Card Fees

     (CN) – After nearly two years of wrangling, the full European Parliament voted Tuesday to cap fees credit card companies charge to merchants, a culmination of years of antitrust investigations and court battles in the EU.
     Acting on a proposal put forth by the European Commission nearly 18 months ago, EU lawmakers from both houses agreed this past December to cap the fees that credit card companies like Visa and MasterCard charge to merchants for accepting credit and debit cards as payment, known as interchange or interbank fees.
     Retailers pass the hidden charges on to consumers, leading to higher prices across the continent. But neither retailers nor their customers have any influence on the fees – hence the legislation, according to the commission.
     Both the EU’s lower court and the European Court of Justice have also ruled that MasterCard’s interchange fees violate antitrust laws.
     In 2012, the General Court rejected MasterCard’s claims that without the fees it would be forced to cut cardholder benefits or find other ways to make up the lost revenue. The EU high court affirmed that ruling in 2014.
     Monday’s vote by the full parliament caps interchange fees at .2 percent of transaction value for debit purchases and .3 percent for credit cards. The bill also gives member states latitude to adopt even lower rates for debit cards and impose maximum fee amounts.
     Additionally, the law removes obstacles to technological innovation in payment options, which regulators believe has been delayed by uncertainty over the interchange fee rules.
     The European Commission – which has openly condemned the fees since 2007 – welcomed the bill’s passage by the full parliament.
     “For too long, uncompetitive and hidden bank interchange fees have increased costs of merchants and consumers,” said competition commissioner Margrethe Vestager. “Today’s vote has brought us another step closer to putting an end to this. This legislation will put a cap on interchange fees, make them more transparent and remove a hurdle to rolling out innovative payment technologies. It is good for consumers, good for business and good for innovation and growth in Europe.”
     The full EU Council must sign off on the bill, with a vote expected before summer.

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