Italian presidency must prioritise card fees legislation, say businesses and consumers
Consumer and business organisations have called on the Italian Presidency of the EU and new European Parliament to make legislation capping payment card fees its “absolute priority.”
The European Payment Users Alliance also wants the EU Council and Parliament to keep amendments made to draft legislation by MEPs in April before the elections. Both institutions could change them during the legislative process.
It backed MEPs changes to include business cards and third party card schemes in the scope of the legislation, part of the revision to the Payment Services Directive. A third party card scheme, such as American Express, means the issuer of the card to the consumer and the acquirer, who has the relationship with the merchant, is the same body. A four party scheme such as Visa or MasterCard, has a separate issuer and acquirer. The acquirer pays an issuer an interchange fee and the merchant pays the acquirer a service fee.
The card industry has argued against including business cards in the regulation. MasterCard’s Andrew Buckley said, “Commercial cards were not included in the original proposals for good reasons. They differ significantly from consumer cards in purpose and usage, and bring huge benefits to small businesses.”
The European Payment Users Alliance state, “ The regulation on interchange fees must be treated as an absolute priority by the Italian Presidency so that it may be adopted by the end of 2014 and come into effect as soon as possible.
“Europe needs to move into a new payments world - yet the lack of this legislation is holding us back. Commerce is increasingly shifting from the high street to the digital space […] we need truly forward-looking payment legislation to allow this new market to flourish.”
In April, the European Parliament voted on amendments to the legislation, which caps interchange fees at 0.2% of transaction value for debit cards and 0.3% for credit cards (here).
The payments, known as multilateral interchange fees or MIFs, are charges during transactions between the merchant and buyer’s banks. Member states can lower the charge ceiling if they wish.
Cross-border caps should come into place within two months of the regulation being adopted, the alliance said. Domestic fees should be capped after six months or a year at the latest.
The amended law is now passed on to the new Parliament. The Council of Ministers must also set out its position on the text. Both Council and Parliament must agree an identical text before it can become law.
Italy took up the rotating six month presidency on 1 July. The European Parliament chose the members of its influential Economic and Monetary Affairs Committee this week.
EurActiv has learnt that member state diplomats will meet to discuss the text in the middle of July. The old Parliament has claimed that the new MEPs will “not decide to restart the project from scratch and will continue the work of the current parliament.”
The Italian Presidency could not be reached for comment at the time of this article's writing, but it has stated growth and employment will be among its priorities. Its website also highlights the importance of SMEs, many of whom will benefit from the cap.
Earlier this week at the European Parliament in Strasbourg, Italian Prime Minister Matteo Renzi focused more on his vision for Europe than the presidency's priorities (more here).
MIFS were found to be anti-competitive in the European courts. The alliance said they have cost businesses and consumers, on average, €9 billion per year for over a decade.
The alliance said, "Card schemes and banks would have us believe that lower card fees would cost consumers money. On the contrary, healthier competition is badly needed in the retail payments market to promote innovation, improve customer service and ensure flexibility.
“The business sectors in the Payment Users’ Alliance are highly competitive, guaranteeing that cost savings will be passed on to their customers.”
Recent Ipsos MORI research, commissioned by MasterCard, found that more than half of high value retailers will not pass on savings from the proposed EU cap on interbank fees on card payments to their customers, and instead invest the money into their business (here).
Members of the alliance include FuelsEurope UEAPME (European Association of Craft, Small and Medium-sized Enterprises), EuroCommerce, European Modern Restaurant Association, European Retail Round Table and Beuc, the European Consumers Organisation.
A multilateral interchange fee (MIF) is an interbank payment made for each transaction carried out with a consumer card.
In a long legal battle waged against what are seen as unfair practices of payment cards groups, the European Commission fined Visa (which is currently under a new investigation) and took on MasterCard for its MIFs. In May 2012, the EU Tribunal upheld the EU executive move against MasterCard.
In an attempt to turn the tribunal's decision into law, the European Commission proposed in July 2013 new legislation capping MIFs at 0.2% of the transaction value for debit card payments, and at 0.3% for credit cards.
In April the old European Parliament passed amendments to the legislation. It is now up to the new Parliament, the Italian Presidency of the EU and the Council of Ministers to finalise it.