EUROPE. The European Commission has announced that non-European Union (EU) consumer debit and credit cards used in European stores will now pay the same interchange fees as a European issued card.
The Travel Retail Fair Payment Alliance welcomed the news, which it said addressed a competitive imbalance.
Interchange fees are default fees that are charged between the card issuing bank and the merchant’s bank on each transaction. A coalition of travel retailers, downtown stores and others lobbied for the removal of interchange fees, and in a 2015 ruling, the EU recognised the fees were not competitive. It also said the fees were outside of European competition rules because they created a floor when negotiating merchant service charges.
The Commission consequently introduced the Interchange Fee Regulation (IFR), which capped these fees for consumer cards issued in Europe at 0.2% for debit cards and 0.3% for credit card transactions. However, cards from other world regions were excluded.
A separate investigation was launched to assess intra-regional cards and culminated with a closed hearing earlier this year. Kappé International Chairman Jacques Parson, who led the travel retail part of the coalition, was invited to present evidence together with Eurocommerce Director General Christian Verschueren.
As a result of the hearing, the European Commission decided to accept separate commitments by Visa and Mastercard for the next five and a half years to ensure improved transparency for retailers leading to better prices for consumers. Mastercard and Visa have offered to cap face-to-face transactions at 0.2% for debit and 0.3% for credit transactions.
The new ruling does not cover commercial cards, while remote sales (such as e-commerce and telesales) card transactions will have higher interchange fees. Online transactions will be capped separately at 1.15% for debit cards and 1.5% for credit cards. The Commission plans to open a short public consultation period within the next few days.
Parson commented: “I welcome the Commission’s announcement regarding Mastercard and Visa’s commitments. Our voice has been heard and overall, this is good news for our industry.
“I am however perplexed at the distinction created between bricks and mortar and online stores. I am not sure that will help the EU’s stated policy for e-commerce, which shows more work is needed in these areas to create a truly fair framework between customers, the schemes and the banks.”
