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Cheaper credit card fees in Europe

Jul 01, 2014
On 3 April, 2014, during their plenary session, the European Parliament adopted the Payment Package which is targeted at cheaper fees for Europeans when paying by credit or debit card and at the standardisation of the rules for online transactions.

The Package includes a revised Payments Services Directive (PSD2) and a Regulation on Multilateral Interchange Fees.

Every Member State has diverse and unclear laws regulating online and card payments which generate a fragmentation of the payments markets. The new legislation is aimed at establishing a level playing field which will contribute to the defragmentation of this market, leading to large benefits for both consumers and retailers/traders.

The Multilateral Interchange Fees Regulation sets caps of 0.2% and 0.3% for debit and credit card transactions respectively. The aim is to reduce the fees that banks charge to retailers/traders for payment services, which in the medium-term will impact the final price for consumers. According to the European Commission, these fees represent a cost of €10 billion a year for EU retailers/traders.

The Payment Services Directive aims to facilitate and render more secure the use of low cost Internet payment services. These service providers will now be subject to the same standards of regulation and supervision as all other payment institutions. At the same time, banks and all other payment service providers will be required to enhance the security of online transactions by including strong customer authentication for payments. The proposed Directive is also intended to give consumers increased protection against fraud and possible abuse.

After the vote in plenary, the proposal still needs approval from the Council. The Greek and Italian Presidencies of the Council have indicated that the payments package is not a priority to them. It is therefore likely that the topic will only be debated in three-way negotiations (Trialogue) between Council, Commission and Parliament in 2015.

In particular, the reforms could provide for an enormous boost for e-commerce.


Photo: New legislation aims to provide benefits to both consumers and retailers.

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