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Recent jurisdiction that came into effect in Europe limits transaction fees in Europe to 0.3% of the transaction. The flip side of this for the customers is th
by ersii 11y ago
Recent jurisdiction that came into effect in Europe limits transaction fees in Europe to 0.3% of the transaction.
The flip side of this for the customers is that the card rewards/kickbacks are decreased as well.
- danmaz74 11y agoAddendum: 0.3% for credit cards issued by Visa and Mastercard. 0.2% for debit cards. Interestingly, there is no law limit for American Express and Discovery (my guess is that Visa and Mastercard were somehow selected for their dominanti position).
- germanier 11y agoNo, the limit also applies to other smaller national schemes. The real difference between Visa/Mastercard and Amex/Discovery is the the former only provide the payment network (the interchange is used to give a cut to issuing banks) while the latter issue their own cards.
- danmaz74 11y agoThanks for the clarification. I was going to ask if this meant that for merchants there would also be additional fees on top of the interchange rate, but already saw your other comment stating this...
- kintamanimatt 11y agoBecause of this legislation I foresee non-EU companies choosing to set up a European subsidiary to take online payments. It's good for Europe and will likely apply an interesting market force on fees outside of the EU.
- blcknight 11y agoThat's not the only downside, this basically kills the possibility of innovation. They're basically solidifying the position of MC and Visa in the market forever, and make it hard for someone else to come in. So far the U.S. hasn't been so successful in taking the power away from these payment networks, but at least there's a chance. I could see someone like Square coming in and dominating the market with a consumer product in 5-10 years.
- vilmosi 11y agoSquare is using Visa/Mastercard too. They mentioned this in the article.
- nfriedly 11y agoI would love for something like that in the US. Rewards cards are basically a legalized bribe, and the real kicker is that they're aren't even spending their own money - its the stores that pay (and us consumers in the end.)
- germanier 11y agoIt's not the total transaction fee that is limited but only the interchange fee. Merchants still have to pay acquirer fees and scheme fees on top. The cost got down around 25% for merchants since the regulation, which is significant but not that much.