Euromoney.com TS 2014 Review | Page 8

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“The payment
market in the EU is
fragmented and
expensive, with a
cost of more than
1% of EU GDP or
€130 billion a year.
These are costs our
economy cannot
afford.”
Michel Barnier,
European Commission

Card interchange fees represent a cost our economy
cannot afford, says internal market and services
commissioner Michel Barnier, as the EU unveiled its
long-awaited cap on credit and debit card transaction fees.
Analysts warn the proposal could wipe out billions of profit
in the payment industry, transfer costs to consumers and
negatively change payment behaviour.
The EU’s attempt to moderate card charges, levelled by
merchants for retail transactions, could have the perverse
result in pushing up the cost of using debit cards in the UK
and elsewhere, say analysts.
The comments come as the European Commission’s
revised Payment Services Directive proposes a cap on the
interchange fees charged on Visa- and MasterCard-branded
cards to 0.3% and 0.2% respectively for credit and
debit cards.

“The payment market in the EU is fragmented and expensive, with a cost
of more than 1% of EU GDP or €130 billion a year,” he says. “These are
costs our economy cannot afford. Our proposal will promote the digital
single market by making internet payments cheaper and safer, both for
retailers and consumers.”
In a directive that will make grim reading for the card issuing banks, “the
proposed changes to interchange fees will remove an important barrier
between national payment markets and finally put an end to the
unjustified high level of these fees”, says Barnier.
And although consumers have, in theory, been shielded from the
interchange fees, which are footed by the retailers, EU Commission
vice-president Joaquín Almunia argues the consumers do ultimately
bear the cost.
Read more of Sid Verma and Solomon Teague’s
EU card-fee cap move sparks backlash >

Internal market and services commissioner Michel Barnier
hit out at card companies, insisting the interchange fees
were contributing to the EU’s economic malaise.

“Not only are consumers generally unaware of [card interchange
fees]… they are even encouraged through reward systems to use
the cards that provide their banks with the highest revenues.”
Joaquín Almunia, European Commission

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