“Payments Package” approved by powerful Economic and Monetary Committee
Lower rates and a fairer structure between travel retailers and banks and card companies took a major step closer last week when MEPs voted to cap fee levels for both consumer and commercial cards and introduce other measures to help retailers and their customers.
Pablo Zalba’s and Diogo Feio’s reports on the European Commission’s “Payments Package” were voted on by the European Parliament’s powerful Economic and Monetary Committee (ECON) last Thursday.
Despite significant lobbying by the banks and card companies, the result ended up an endorsement of retailers’ position on card fees and structures. It marked a critical step for the European Commission’s “Payments Package” proposals, which aims to drastically improve competition and conditions for retailers and other stakeholders in credit or debit transactions, both in store and on-line.
A key result of the vote would be the capping of credit card transactions at a maximum 0.3%, while debit cards would similarly be capped at a maximum 0.2% or 7 euro cents per transaction, whichever is the lower. In a major victory for the business, these proposals now cover commercial, or corporate cards and would cap fees for card schemes like AMEX and Diners club if their volumes exceed a certain trigger point.
The Parliament now aims to ratify these reports in a vote at a plenary session sometime in April, before the Parliament dissolves for the European elections in May. Once they have been ratified, the process moves to the Council of Ministers to adopt the texts before they become European law.
Once adopted, these new regulated rules are planned to enter into force across all Member States within one year, with a review on the functioning of the new regulations two years later.
This payments package vote came at an important moment in the campaign for fairer fees for retailers and our customers. At the European Court, a full and final court ruling is anticipated shortly following the Advocate-General’s recent initial opinion dismissing MasterCard’s appeal against the Commission’s 2007 Decision prohibiting their Multilateral Interchange Fees.
The Commission has also moved a step forward on its “Cost of Cash Test”, which seeks to identify at which point cash and other means of payment become neutral in terms of costs, with indications that the level is significantly lower than had previously been argued by the banks.
Fair Payment Alliance leader, Jacques Parson, who also chairs the Dutch Retail Federation’s Payments Committee, said: “It has been a busy time for our network and our stakeholder allies, such as EuroCommerce and we are very pleased overall with this vote. It puts us now more firmly in the driving seat than retailers have ever been politically on card fees and the payment structure. However we must take care. This is not the end but a first step, albeit a crucial first step. We have a full plenary vote first and then much work to do with our network and other stakeholders with the Council of Ministers. It is imperative to ensure the clear intentions of this payments package are delivered into European Law for the benefits of travel retailers and our customers.”