The fees that banks charge retailers to process shoppers' payments will be capped, under uniform EU-wide rules passed by the European Parliament on Tuesday. The cap, which will apply to both cross-border and domestic card-based payments, will result in lower costs for debit and credit card users.

"This legislation, combined with the upcoming Payment Services Directive, will establish a level playing field for payments across Europe. It should enhance fee transparency, stimulate competition and enable both retailers and users to choose the card schemes that offer them the best terms", said Pablo Zalba, who steered the proposal through Parliament. The legislation was passed by 621 votes to 26, with 29 abstentions.



The European Commission estimates that the rules when implemented could lead to a reduction of about EUR6 billion annually in hidden fees for consumer cards. The "Regulation on Interchange Fees for Card-based Payment Transactions", which largely follows a Commission proposal from July 2013, will also give more freedom of choice to retailers, enhance transparency for card transactions, and pave the way for innovative payment technologies to be rolled out.



For cross-border debit card transactions, the agreed fee cap is 0.2 percent of transaction value.

For domestic debit card transactions, at Parliament's request, the same 0.2 percent cap will apply after a five-year transition period in which EU member states may cap fees at 0.2 percent of the "annual weighted average transaction value of all domestic transactions within the card scheme".

For smaller domestic debit card transactions, member states may also set a maximum fixed fee of EUR0.05 per transaction, after the five year transition period.

For credit card transactions, fees will be capped at 0.3 percent of transaction value and member states can set a lower fee cap for domestic credit card transactions.

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