EU to curb credit card costs

The European Commission was proposing legislation that would cap fees of debit card transactions within the EU at 0.2 percent, and transactions for credit cards at 0.3 percent, the EU's executive arm announced Wednesday.

In a first phase, respective legislation was planned to be introduced for cross-border transactions, while domestic transactions were scheduled to be included after a period of 22 months, the EU Commission said.

The regulation would prevent excessive levels of these fees and created a level playing field for all competitors, said EU Competition Commissioner Joaquin Almunia, as he presented the proposal in Brussels.

“New players will be able to enter the market and offer innovative services, retails will make big savings by paying lower fees to their banks, and consumers will benefit through lower retail prices,” Almunia added.

The move came after the EU Commission had been investigating interchange fees, which banks pay each other to process payments made by debit or credit cards. In the past, the EU's executive already launched anti-trust probes against card giants Visa and MasterCard, which rake in the biggest chunks of a total of 130 billion euros ($170 billion) in fees paid in the EU annually.

However, MasterCard has warned of unintended consequences of regulating the costs of paying with plastic.

The biggest losers were consumers and businesses, as similar regulation introduced in Australia, Spain and the United States had shown, the company said in a recent statement.

In related legislation, the EU commission also proposed measures to increase the security of online transactions and to improve safeguards against credit card fraud.

The entire package of proposals is subject to the approval of the governments of all 28 EU member states.

uhe/tj (dpa, Reuters, AFP)