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EU drafts plan for interchange fee cap

July 17, 2013

The European Union might be closer to adopting its own Durbin-esque caps on network interchange fees that "restrict competition as they inflate the cost of card acceptance by merchants without leading to benefits for consumers."

Bloomberg lifted the above quote from a draft of the plan that it said it had obtained.

The document was crafted by the EU's executive arm, the European Commission. It recommended fee caps of 0.2 percent for debit transactions and 0.3 percent for credit transactions. Caps would first be imposed on cross-border transactions, then expanded to include all transactions after two years.

The plan comes in response to longstanding retailer complaints about high exchange fees. The EU commission has launched probes into the practices of MasterCard and Visa, however, these "may not lead to sufficiently comprehensive and timely results to unlock the market integration and innovation that are necessary," according to the commission's document.

In addition to fee caps, the plan would do away with the requirement that retailers accept all cards issued by a network and would allow retailers to steer customers toward "more efficient payments instruments."

The commission will publish its draft of the plan on July 24, after which it will be submitted to EU nation governments and the European Parliament for approval.

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