EU reaches deal to cap card payment fees

According to Reuters, the cap would apply to both cross-border and domestic card-based payments and should result in lower costs for consumers. Currently, such interchange fees for card-based payments, paid by the merchants bank to the bank that issued the card, are not transparent and differ between EU countries.

For cross-border debit card transactions the negotiators agreed on a cap of 0.2% of the transaction value. For domestic transactions, EU countries can apply the cap of 0.2% to the annual weighted average transaction value of all domestic transactions within the card scheme. For credit card transactions, the agreed cap is 0.3% of the transaction value.

Under the initial deal the new rules would not apply to three-party card schemes, which involve only one bank, provided the card is both issued and processed within the same scheme. Commercial cards used only for business expenses would also be exempt from the new capping rules.

These caps will take effect six months after the legislation enter into force. But it first needs to be endorsed by EU governments and by the Economic and Monetary Affairs Committee, before being put to a vote by the full Parliament in 2015.