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Though most European-member states likely will allow merchants to assess surcharges on bankcard transactions under the Payment Services Directive scheduled to take effect in November, some experts doubt many merchants will take advantage. The directive, issued by the European Union and being passed into law by member states, gives lawmakers in each EU country the right to decide whether merchants can surcharge. Observers expect only a few states to outlaw the practice, however, including France. But in those countries that already allow surcharging, such as the United Kingdom, Netherlands and Sweden, few merchants other than those doing business on the Internet charge their customers who use credit or debit cards. That is despite support for surcharging by merchant groups that contend interchange rates on card transactions are excessive. "In the retail environment, [surcharging is] a pretty disruptive form of interaction with your customer," Joel Van Arsdale, a analyst in the Netherlands for United States-based consulting firm First Annapolis, tells CardLine Global sister publication Cards&Payments. "[Merchants] tend not to get a favorable reaction." In the Netherlands and Sweden, merchant interchange fees are cheap, so the merchants have had little incentive to surcharge, says Malte Krüger, a consultant with Germany-based PaySys Consultancy GmbH. Credit cards account for relatively few transactions in these countries, he adds. As interchange rates drop elsewhere in Europe, it could also give merchants fewer reasons to charge for card use, Krüger tells Cards&Payments. Where it may become a topic is e-commerce. "In e-commerce, payment costs are relatively high, so there is more of an incentive to surcharge," Krüger says. In the UK, discount airlines and some other travel-related companies routinely surcharge card transactions conducted online, especially credit cards. And in the Netherlands, merchants charge consumers paying with cards more than those who use a Web-payment scheme called iDEAL. The scheme, supported by the major banks in the Netherlands, enables consumers to pay for purchases directly from their bank accounts. The banks charge Web merchants lower fees for using iDEAL. But even if most merchants do not surcharge, it seems likely European regulators will protect their right to do so if the member state permits it. And other EU rules will enable ATM operators to surcharge transactions regardless of national laws, say observers. The European Commission is investigating card scheme Visa Europe in part for its no-surcharge rule at the point of sale. For its part, Visa points to survey findings that suggest surcharging turns off consumers. "If they are truly committed to displacing more cash payments, then the [commission] and the [European Central Bank] need to consider the introduction and enforcement of real incentives that are capable of promoting the most-efficient payment services," Visa Europe told Cards&Payments in a statement.
