EU Parliament Fixes Cost of Card Payment Charges


Following a vote taken in Parliament, bank fees incurred by shoppers and retailers on card-based payments will be capped. The aim of these new EU-wide regulations is to lower costs for both card users and retailers on cross-border and domestic card-based payments.

Paolo Zalba (EPP, ES) who was at the forefront of the proposal and discussions in Parliament said, “This legislation, combined with the upcoming Payment Services Directive, will establish a level playing field for payments across Europe. It should enhance fee transparency, stimulate competition and enable both retailers and users to choose the card schemes that offer them the best terms.”

At present, the card issuers are in a position to compel retailers to accept all forms of cards under conditions the issuer chooses to set. Therefore, the new regulations with fixed fee-capping rates set in place clear card schemes that allow the retailer to accept only cards within the chosen scheme. Consequently, a narrower range of cards may be accepted by retailers, but shoppers and retailers alike will also find that capped fees should minimise their cost.
The agreed fee cap for cross-border debit card payment stands at 0.2% of total transaction value. At Parliament’s request, the same fee cap of 0.2% will apply for domestic debit card transactions after a five-year transition period during which EU member states may cap fees at 0.2% of the “annual weighted average transaction value of all domestic transactions within the card scheme.” With regards to smaller domestic debit cards transactions, a fixed fee of maximum €0.05 may be applied after the five-year transition period has expired. In the case of credit card transactions across all scenarios, a capped fee of 0.3% of the total transaction value will apply, however member states may set a lower fee cap for domestic credit card transactions.

“Three-party” (involving one bank only) card schemes including Diners and American Express are not subject to the new rules, as long as the card is issued and processed within the same scheme. However, the rules will apply after three years to three-party card schemes that allow other parties to issue cards, as this bypasses the law by acting as four-party ones. Cash withdrawals carried out at ATMs are not affected by the new capping rules.

After Parliament’s vote, the Council of Ministers needs to officially endorse the new rules six months after legislation has entered into force for the regulations to come into effect.