The European Commission is preparing to put a 0.2% cap on all credit and debit card transaction processing fees, according to the Financial Times.
MasterCard and Visa have been battling European authorities for years over the interchange fees that they charge for processing card payments.
Having initially contemplated an outright ban on debit card fees, the EC now looks set to settle on a 0.2% ceiling on both credit and debit transactions, according to a draft plan seen by the FT.
The move would be phased in over two years, with the limit initially only applying to cross-border transactions.
The EC estimates that a cap will slash total debit card fees across the EU from around EUR4.8 billion to EUR2.5 billion, and credit card fees from EUR5.7 billion to EUR3.5 billion.
MasterCard and Visa have already been forced to reduce their cross-border fees to similar levels through antitrust deals but the charges for domestic transactions currently vary widely between countries.
The draft EC plan also requires card schemes and the entities that process transactions to be legally separated.
Card-transaction fees to be capped under EU proposal - FT/CNBC
American Express Company (NYSE: AXP) issued the following statement today based on preliminary reports characterizing the contents of the European Commission’s draft proposals on payment industry regulation that is scheduled to be released next week.
- The publication of formal proposals by the Commission will mark the start of a lengthy legislative process and review period. We expect these proposals to prompt extensive debate among many market participants.
- The proposals focus primarily on and cap the interchange fees charged by four-party payment systems, such as Visa and MasterCard.
- The discount rate that American Express charges merchants would not be regulated.
- Our proprietary consumer and corporate card businesses are not covered by the proposed pricing caps.
- Three-party systems, such as American Express, would only be covered when they license other institutions to issue cards, as in our Global Network Services Business. GNS represents a relatively small percentage of our European business.
- The provisions that focus on separating the payment network and processing functions do not appear to impact proprietary networks like ours.
Given the potential impact on consumers and competition within the European payments sector, American Express has been in touch with senior policy makers at the Commission and will continue to represent its positions vigorously throughout the process.