BRUSSELS, Belgium The European Union is proposing to settle a long-running antitrust probe regarding Visa and MasterCard by capping interchange fees on card transactions, which the Federal Reserve did for U.S. debit transactions a year ago.
The European Commission, the 28-nation EU’s executive arm, will propose that interchange fees paid by retailers on card transactions should be capped at 0.2% for debit card payments and 0.3% for credit cards, according to draft plans. The caps initially would apply to cross-border transactions, and then be expanded to also cover domestic payments after two years.
European merchants, similar to those in the U.S., have been fighting the two card networks over swipe fees for years, prompting the EU to investigate whether the two card giants are violating antitrust laws in setting the rates.
The proposed caps fall short of earlier proposals, which would have banned the fees altogether.
EU antitrust regulators have targeted credit and debit card fees for a decade, warning that the way the charges are collectively agreed on is anti-competitive.
The proposal comes as Visa USA and MasterCard are working to get final approval on another antitrust case, in which retailers will be paid $7.2 billion to settle civil price-fixing charges.
The 0.2% and 0.3% caps are based on levels proposed by Visa and MasterCard during antitrust proceedings and “accepted by the competition authorities as not requiring further action,” according to the draft. “They appear as reasonable benchmarks that are practical for the card schemes and payment service providers and also provide legal certainty.”
The rule would cover interchange fees on “all card transactions that are widely used by consumers and therefore difficult to refuse by retailers,” says the draft.
In addition to the caps, the EU plans include a relaxation of existing rules that require retailers to accept all cards issued by a provider such as MasterCard or Visa, and rights for retailers to steer customers toward “more efficient payments instruments,” according to the plan. Card providers will have to provide more fee information, and allow retailers to disclose such data to their customers.
