Visa and Mastercard Agree to Cap Merchant Fees for European Tourists
Visa and Mastercard agreed to cap the fees charged on card payments made by tourists in the European Union in an effort to avoid fines and investigations. The European Commission says the current fee structure ultimately hurts the consumer because merchants have to increase their prices to make up for the fees.
Under the new structure, EU cards and non-EU cards will carry the same interchange fee, which is the fee merchants pay every time they process a card. Previously, tourist cards carried a higher interchange fee. Now, non-EU debit cards will have a 0.2% fee, and non-EU credit cards will have a 0.3% fee for in-person purchases.
EU interchange fees were scrutinized for years after a lobby group called EuroCommerce made a complaint in 1997. The group approves of the new offer from Visa and Mastercard, but they do not agree with the structure for online purchases.
While offline fees remain low, online fees for debit cards will be 1.15%, and fees for credit cards will be 1.5%. The credit card issuers argue the extra fees are due to the risks associated with online transactions. But EuroCommerce says they “cannot understand why merchants should be charged more for a perceived risk which can only arise by the card issuers’ failure to implement adequate fraud prevention measures.”
The European Commission is expected to make their final decision in approximately one month.