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On December 17th, the Italian Presidency of the EU Council has reached a political agreement with the European Parliament in order to further enhance harmonization by providing for a uniform level of fees throughout the Union and to improve transparency. According to this agreement, interchange fees for both cross-border and domestic card-based payments shall be capped under uniform rules applicable in all Member States.
For cross-border debit card transactions the agreed cap is 0.2% of the transaction value. For domestic transactions, it has been agreed that Member States can apply the cap of 0.2% to the annual weighted average transaction value of all domestic transactions within the card scheme, in order to ensure a sufficient level of flexibility that will allow domestic card schemes to maintain their level of efficiency; this rule will apply for five years, thus allowing for a smooth adaptation by the schemes to the new rules provided for in the Regulation. Thereafter, interchange fees for domestic transactions will be subject to a cap of 0.2% of the transaction value, or set at a fixed fee of at most five cents per transaction.
For credit card transactions, the parties agreed to cap the fee at 0.3% of the transaction value.
These provisions will take effect six months after the legislation enters into force.
In addition, the Regulation further enhances harmonization by defining business rules and standards applicable throughout the EU. It increases competition by ensuring that retailers will be free to choose which cards to accept, unless they are subject to the same interchange fee; it provides for organizational separation between card schemes and processing entities in order to reduce the "bundling" of services in the payment cards market and it increases the choice of the most efficient payment solutions by giving consumers the possibility of having more brands on the same card.
These rules will take effect twelve months after the Regulation enters into force.
The Chairman of the Permanent Representatives Committee, Ambassador Stefano Sannino, said: “The conclusion of this political agreement between Council and Parliament will allow to increase the harmonization and strengthen competition in the payment cards market. The Italian Presidency worked in favor of provisions providing benefits for retail customers throughout the political negotiations.”
Interchange fees for card-based payments are fees paid by the merchant's bank (acquirer) to the bank that issued the card (issuer); merchants are charged for each card transaction accepted and could add the costs of these charges to the prices of the goods or services they offer. These fees are not always transparent and their levels differ across Member States.