Key rule changes designed to introduce more competition and update the credit and debit card payments landscape are set to ignite a lengthy dispute over technicalities when they come before committee in the European Parliament next week.
The Commission published its update of the Payment Services Directive in July, along with a separate regulation on multilateral interchange fees (MIFs). Both of these have elicited Parliamentary reports in advance of discussion in the economic and monetary affairs committee next week (17 December).
The updated Payment Services Directive aims to cover regulatory and security challenges posed by a range of existing card and new mobile payments services expected to explode onto the European scene over the next two years.
MIFs are charges paid by a retailer to a cardholder’s bank as part of an electronic payment card transaction, whether through a debit or a credit card.
Interchange fees to be discussed by Parliament
The Commission’s proposal would set new capped levels for MIFs at 0.2% and 0.3% of the transaction value for debit card and credit cards respectively.
The Parliament’s MIF report, presented by rapporteur Pablo Zalba Bidegain (Spain; European People’s party), retains that proposal, though some political groups are set to resist the idea.
“There we are going to have the big debate, I am not satisfied about these figures, and have asked where the 0.2% and 0.3% come from,” said Dutch MEP Sophie in t’Veld of the Alliance for Liberals and Democrats for Europe.
Meanwhile, Zalba has proposed changes to the original proposal that are expected to provoke intense discussion amongst MEPs.
He suggested allowing card companies to ask merchants to offer customers the use of all bank cards within a company's portfolio – the so-called 'honour all cards' rule, a practice the Commission wants outlawed. He also proposed that the MIF caps should be applied across a 'weighted average', giving some flexibility as to how card companies apply the caps.
Zalba amendments resisted by merchants
These amendments drew sharp criticism from merchant representatives. “The draft European Parliament report on the proposed Regulation on MIFs would water down the Commission proposal so that the majority of the potential benefits to consumers and to merchants would be lost,” according to a statement from EuroCommerce (12 December), a body representing the retail and trade sectors in Europe.
Meanwhile card companies themselves remain unhappy with the MIF proposal. “MasterCard remains deeply concerned by the preservation of the Commission’s one-size-fits-all approach to interchange across Europe, as it does not appear to be based on any clear methodology,” a statement from the company said.
Interchange levels are only one part of a complex equation, however, with the Parliament simultaneously considering its report on the main proposed update to the payments services directive.
That report, written by MEP Diogo Feio (Portugal; European People’s Party), will be considered at the the same time by the economic affairs committee, but outstanding questions arise over what sort of payments would be captured by the proposed law.
“Speaking to different people it can be hard to determine a position on these issues,” said in t’Veld, adding: “Conflicting interests may be valid interests. On whether three-party and four-party schemes are included and definitions of third party providers there remain some very complex issues.”
Dossiers are complicated, technical
The technical complications may hamper progress on the proposal, but Feio remains bullish that the Parliament can reach a compromise in time to agree the proposals before the end of its mandate.
In an interview, he told EURACTIV that he is cooperating with Zalba to ensure that the two proposals progress together, and called for more simplification of language in the proposal. "It is a very technical paper," he said.
"A common denominator is that we all want more competition and more entrants into the market, and the creation of a truly open, single market for payments, it is how we achieve that there are many differences,” said in t Veld.
>> Read our LinksDossier: Payment Services Directive: The new payments landscape