Comment: US debit card ruling heralds good news for retailers
But how long can credit card issuers keep issuing credit for free?
Following a US ruling that has paved the way for lower fees for billions of debit card transactions passing through retailers each year, Fiona Ghosh, payments expert at global law firm Eversheds, comments:
“This case decision in the United States is timely indeed as it is hot on the heels of the publication of draft regulations from the European Commission on setting statutory limits on interchange throughout Europe. These regulations would, in effect, set a limit of 0.2% per transaction on cross border direct debit transactions extending after 2 years to cover all direct debit transactions in the European Union, both domestic and cross border.
“Obviously, this is good news for retailers who have been battling hard against the monopoly of the payment networks, both in the EU and in the United States. It does however raise the question about how long credit card issuers can keep issuing credit for free – consumers cannot have their cake and eat it. If we are not paying for interchange, the payment systems will look to make their money elsewhere and that could be in raising other card fees.”
