EU to cap charges for bank card payments

The European Commission proposed on Wednesday a cap on bank card payment fees to cut billions-euro cost for market. Internal Market and Services Commissioner Michel Barnier announced today that the proposal will "promote the digital single market by making internet payments cheaper and safer, both for retailers and consumers. And the proposed changes to interchange fees will remove an important barrier between national payment markets and finally put an end to the unjustified high level of these fees." According to Barnier,the payment market in the European Union (EU) is fragmented and expensive with a cost of more than 1 percent of EU GDP or 130 billion euros (172 billion U.S. dollars) a year. Under the proposal, the caps will be set at 0.2 percent of the value of the transaction for debit cards and 0.3 percent for credit cards. EU competition commissioner Joaquin Almunia added that "The interchange fees paid by retailers end up on consumers' bills. Complementing the enforcement of antitrust rules, the regulation capping interchange fees will prevent excessive levels of these fees across the board. Retailers will make big savings by paying lower fees to their banks, and consumers will benefit through lower retail prices." Capping the interchange fees will reduce costs for retailers and consumers. The commission estimates that the new rules could save retailers six billion euros. The new cap has already been accepted by competition authorities for a number of transactions with cards branded MasterCard, Visa and Cartes Bancaires. For the cards that are not subject to the caps, retailers will be able to surcharge for them or to refuse to accept them. Almost every account holder in the EU possesses a debit payment card and 40 percent of them also own a credit card. About 34 percent of EU citizens already shop on the internet and more than half possess a smartphone, which facilitate them to get access to the world of mobile payments.