Ecommerce Europe concerned with European Ministers’ proposals for watering down caps on bank fees


European Financial Affairs Ministers and the European Parliament are currently negotiating about regulating multilateral interchange fees (MIF): the fees charged by banks to merchants for payment card transactions made with either debit or credit cards. However, negotiations got stuck last week because the Council put its foot down on two points: The Council wants more flexibility in calculating the ceiling of the MIFs, based on a weighted average. Also, it demands to exclude certain cards from the Regulation.

Council proposal reduces transparency and competition
Ecommerce Europe is very concerned with the Council’s proposals, as calculating the caps based upon a weighted average would not be transparent to merchants. Moreover, watering down the Regulation by excluding certain cards would still not create a competitive payments landscape as widely used cards would not be subject to the cap on the fees: the Ministers in the Council demanded to exclude all card products used by organizations for business expenses, and bank cards issued by companies like American Express (which do not operate on the traditional model used for payment cards like MasterCard and Visa).

European Commission and European Parliament want more innovation
In the original proposal, the European Commission had proposed to bring down the fees banks are allowed to charge merchants on all card transactions to maximum 0.3% for credit cards and 0.2% for debit cards. The European Parliament largely agreed with the suggestions of the Commission for modernization. The legislation under discussion will create the framework for all online payments in Europe for the years to come. It aims to modernize the European payment services industry and to increase competition and innovation in the market. For online merchants this would mean they can offer the consumer more choice in safe and easy-to-use payment methods, at a fair cost.

Next steps
The European Parliament has asked the Council to come up with a modified text of the legislation, which will be discussed in a new negotiation meeting today. The Italian Presidency is keen to get a final text agreed by all parties before Christmas, after which both the European Parliament and the Council will have to give their formal approval (probably in February/March 2015) before the legislation is final. It will then still take several months until the legislation enters into force.

Ecommerce Europe’s position
Ecommerce Europe welcomes the efforts of the European policy makers to modernize the legislative framework for the payment services industry. The e-commerce sector needs a more innovative, transparent and stronger e-payments landscape. This means that the rules for calculating caps on fees should be clear, and that all card transactions are included in the rules.

Better payments for the e-commerce sector
Ecommerce Europe and its national associations have contacted the European Ministers for Economic and Financial Affairs (ECOFIN) with this clear message. For further information on Ecommerce Europe’s recommendations, please click here for the updated version of the Position Paper on e-Payments (2014).