On Wednesday the European Commission proposed to limit the fees that banks charge each other for transactions through credit and debit cards. The maximum amount of charges should not exceed 0.2 percent of the transaction value for debit cards and 0.3 percent for credit cards. At present, fees may rise up to 1.5 percent. These limitations should first affect trans-national transactions and after the initial transitional period of 22 months, they should become valid for all domestic transactions.
The proposed changes should decrease the overall sum of fees from debit cards by some 48 percent and fees paid for credit card payments by some 38 percent, claims the European Commission. Joaquín Almunia, European Commissioner for Economic andMonetary Affairs claims that the current high fees that small businesses pay for such transactions have transformed into higher prices, and that this should lower their fees. Moreover, he explained this initiative as a way to fight against big monopolies, offering all providers of payment cards equal conditions. The Slovak Business Alliance anticipates that this regulation could cause a drop in the use of credit cards as well as in the payments done via such cards. As the Alliance’s director Róber Kičina argues, a de-regulated environment would in fact motivate consumers to use card payments more and withdraw less from ATM machines. Introducing this regulation could in fact have the very opposite effect and could make payment cards a means for cash withdrawal rather than a means for payment. Moreover, if fees are lowered artificially, it could have a negative effect on payment cards and other bank services, for example issuing a card could go up, in effect, as well. “No team of bureaucrats in Brussels will ever be able to calculate better prices for transactions realised with a payment card than the market itself,” Kičina concludes. MasterCard believes this proposal of the European Commission would not be beneficial to consumers and small businesses and it could limit competition and innovations.
