BERLIN (AP) — The European Union said Wednesday that it plans to cap some credit and debit card fees in a move that would save retailers up to 6 billion euros ($7.9 billion) per year.
The European Commission, the 28-nation bloc's executive arm, said limiting the fees paid by retailers to banks every time a customer uses a card will ultimately lead to lower prices for all consumers.
The proposed legislation would cap the so-called interchange fees at 0.2 percent of a transaction's value for debit cards and 0.3 percent for credit cards. In some countries, fees are currently as high as 1.5 percent of a purchase's value.
Most consumers, however, are unaware of the behind-the-scenes charges.
"The interchange fees paid by retailers end up on consumers' bills," EU Competition Commissioner Joaquin Almunia said at a news conference in Brussels. "This needs to change."
The proposal still needs approval by the European Parliament and a majority of EU member nations.
One credit card company, Mastercard Inc., warned against the planned cap, saying that the move could lead to higher card fees for consumers.
"We are concerned about the harm these proposals will cause to consumers and small merchants in the EU," the company said in a statement Wednesday.
But EU Commissioner Michel Barnier, who is in charge of financial services, insisted the legislation will lead to lower prices for consumers, dismissing Mastercard's lobbying efforts against it as an "unbearable campaign" of disinformation.
Competitor Visa, however, joined in the criticism Wednesday — warning "these proposals will be detrimental to the innovation that will support European economic growth."
The lobby group for Europe's retailers said the caps should be even harsher, but welcomed the proposals as a significant step to foster competition and transparency.
"They should allow retailers to pass savings on to consumers, bringing them real benefits in these times of hardship," said EuroCommerce chief Christian Verschueren.
The Commission's proposal also aims at axing another, more widely understood, credit card fee: The surcharges imposed by some merchants on card payments, notably on purchasing airline tickets.
Separately, the Commission, as the EU's competition watchdog, is also investigating whether some other fees charged by Mastercard and Visa violate antitrust rules. The two card companies combined have a market share of about 90 percent in the European Union, which forms the world's largest economy.