European Parliament Introduces Card Payment Fee Caps

The fees that banks charge retailers for processing shoppers' payments would be capped under new rules voted by European Parliament on Thursday.

Measures to make online payments safer, reduce costs and give users more choice were adopted by a separate vote on the same day, an official press release on the EP website states.

Banks' card payment fees cost EU retailers over EUR 10B each year, according to European Commission figures. These fees are not clear to card users. They also differ between EU member states, because they are fixed not by law but by national competition authorities. Retailers are charged for every card transaction and add the costs to the prices of goods or services they sell.

Fees: clear and capped

The service or "interchange" fees that banks charge for processing transactions under schemes such as Visa and MasterCard, would be capped at 0.3% of the transaction value for credit card transactions and EUR 0.07, or 0.2% of the transaction value (whichever is lower), for debit card ones.

These caps would apply to both cross-border and domestic transactions in the EU and would take effect one year after the rules enter into force. In time, lower fees should translate into lower prices for card users.

Online payment security rules, also voted on Thursday, would be updated to keep pace with technical progress, market developments and the constantly growing number of payments made online. Online payment service users would also get a uniform set of information for example all charges, execution times, contact information and where applicable exchange rates, would have to be clearly stated.

Unauthorized payments would have to be refunded within 24 hours of their being...