EU takes another step towards capping credit card fees

The European Parliament on Thursday appeared set to fast-track a cap on fees paid on credit card transactions, in a vote which was welcomed by consumer advocates. A plenary session of parliament sitting in Brussels voted to impose a fee ceiling of 0.3 percent of the transaction value which banks charge businesses when customers use credit cards such as Visa and Mastercard. Debit cards would also be affected by the proposal, with a fee cap of 0.2 percent of the transaction or a total of seven euro cents ($0.09) -- whichever is lower. These fees are paid by the banks involved in a card transaction and are then charged to the retailer. The European Commission, the EU's executive, had drafted the original bill arguing the high charges imposed on businesses by banks were being passed back to customers. Commission data suggests the caps would almost halve the total fees levied, which vary widely between member states. It says combined savings could run to 730 million euros ($395 million) a year. Members of parliament voted for the bill's amendments but postponed a vote on the resolution itself -- a practice which paves the way for a deal with the EU's 28 member states for a swift adoption of the bill. If given the green light by governments, the draft legislation would then return to parliament after elections in May. "A cap on credit and debit card payments will make transactions significantly cheaper, which would allow retailers to stop adding on this cost to the price of their products," said Monique Goyens from BEUC, a European consumer organisation. The bill approved by Parliament would also beef up consumer safeguards for online purchases, with companies involved in unauthorised payments required to refund customers within 24 hours. The changes would also prevent banks from charging customers more than 50 euros ($68) for losses resulting from the illegal use of a lost or stolen payment card.