A draft report before MEPs on 17 December will attack the European Commission's proposal to regulate credit card companies and ask parliamentarians to rewrite much of it.
Pablo Zalba Bidegain, the centre-right Spanish MEP preparing the Parliament's response to the Commission's proposal, is in favour of altering key aspects of the draft legislation, including the proposed price caps and the provision for “co-badging” – allowing card-issuers to place Mastercard and Visa on the same card.
In July 2013, Michel Barnier, the European commissioner for internal market and services, and Joaquín Almunia, the European commissioner for competition, proposed to regulate the fees paid by retailers to banks for each card transaction.
The Commission has been entangled in anti-trust proceedings with Mastercard and Visa since 2000 over concerns that they use their market power to impose unfair prices and conditions on retailers. In his draft report, Zalba describes the Commission's price caps on interchange fees as “completely arbitrary”. He suggests instead that any caps should be based on an average of all EU transaction fees, so as to allow for differences between national markets.
As for the Commission's proposal on co-badging, it “contravenes the most basic principles of competition between brands” and should be scrapped, according to Zalba. Preventing “honour all cards” rules – whereby, for example, Mastercard obliges retailers to accept all Mastercard cards no matter if some are more expensive – would merely see consumers lose confidence in cards and resort to cash, he suggests.
Zalba also proposes extending the Commission's proposal to cover not only card schemes of the type used by Mastercard and Visa, as well as by other credit card companies, but also those employed by American Express and eBay.
One of the few points of agreement between Zalba and the Commission is on the need to allow retailers to acquire their payment instruments from banks in other member states. MEPs in the economic and monetary affairs committee are expected to vote on the draft report in February.