Zywicki in NYTimes: EU Proposal Disaster for Consumers

Calling the European Union's proposal to cap interchange fees on credit and debit card purchases "an unqualified disaster for consumers," Professor Todd Zywicki countered arguments that lower fees would benefit consumers with lower prices. 

"In every country that has imposed price controls on interchange fees, consumers have felt the pinch through higher bank and credit cards fees and reduced quality in access," said Zywicki in an article appearing in the New York Times. "Yet in none of these countries has there been any documented pass-through of these savings to retail consumers through lower prices."

The proposal partly mirrors recent American efforts to restrict interchange fees on debit cards but goes a step further by including credit card fees, as well. 

The European Parliament and a majority of European Union member states must approve of the proposal prior to its becoming law, a process that could prove lengthy.

European Union Advocates Limiting Fees on Debit Card and Credit Card Transactions, The New York Times, July 24, 2013. By James Kanter.

"The European plan would cap such fees at 0.2 percent for debit card transactions and 0.3 percent for credit card purchases. Officials said the credit card levels would be particularly beneficial in Poland and Hungary, where fees are especially high.

"The rules would also limit the surcharges imposed by some merchants on card payments for purchases, in particular airline tickets. Such sums can add 12 euros (about $16) to an individual purchase, according to commission officials.

"Another measure would let Visa and Mastercard formally separate their credit card services business from their processing business. The split, said European regulators, should help bolster competition."

Read the article