The economic and monetary affairs committee of the European Parliament voted on Thursday (20 February) in favour of caps to the fees charged by payment cards companies and banks on shoppers’ purchases, paving the way for the entry into force of the new legislation.
The fees, best known by their acronym MIFs (multilateral interchange fees), have long been the object of a legal dispute between the EU authorities and the leading payment cards companies (MasterCard and Visa).
To bring the dispute to an end, last July the European Commission tabled proposals aimed at setting new fee limits at 0.2% and 0.3% of the transaction value for debit cards and credit cards respectively.
The caps would apply to both domestic and cross-border transactions.
The economic affairs committee of the Parliament broadly endorsed the Commission proposal. “These fees are not transparent and they differ between EU member states, where they are subject not to legislation but to decisions by national competition authorities,” reads the press release announcing yesterday’s MEPs decision.
For debit cards MEPs amended the cap proposed by the Commission, and agreed a €0.7 cents cap in alternative to the tabled 0.2% of the transaction value, underlining that the limit to apply should be “whichever is the lower.”
In the EU, over 23 billion payments are made every year with payment cards, the overall value of which exceeds €1,350 billion.
The Commission estimates that MIFs cost EU retailers over €10 billion each year. These costs are eventually carried by shoppers which pay a hidden tax on their purchases, according to retailers’ organisations.
The caps would provide a definitive legal cover for commitments already made and partially applied by MasterCard and Visa.
Visa Europe is already capping at 0.2% the MIFs on debit card transactions, and has offered to lower credit card MIFs to 0.3%, the same benchmark applied by MasterCard. The Commission is currently analyzing Visa’s offer but is said to be likely to endorse it.
A legal dispute at the EU Court of Justice brought by MasterCard on the same case is also likely to end up with the upholding of the Commission decision, confirming the illegality of existing MIFs.
Parliament's decision will be brought to the plenary of the assembly “at an upcoming parliamentary session,” reads a Parliament note. But MEPs close to the dossier said it will likely be postponed to the Italian Presidency, after 1 July 2014.