Commission split on extra credit card fees

Date: 12/02/1998

By Chris Johnstone

COMPETITION Commissioner Karel van Miert has vowed to continue his efforts to win support for a wide-ranging shake-up of the rules governing the use of credit cards, despite opposition from some Commission colleagues, member states and banks.

"We are trying to work this out but it remains a controversial issue," said Van Miert, adding: "You must recognise that it is not an easy decision - sometimes you have borderline cases."

Moves to abolish existing rules, which force shops to treat credit cards like cash by not imposing any extra charges on customers for their use, are a key part of a package of far-reaching reforms being proposed by Van Miert's Directorate-General for competition (DGIV).

The rule banning discrimination between cash and credit cards has already been dropped in a handful of EU countries, including the UK. However, other member states, led by France, are fighting a rear-guard action against the Commissioner's proposals for Europe-wide reform.

"Governments are divided on this. Some have already taken a decision on non-discrimination and others say it should be retained. Consumer groups are somewhat divided as well," said Van Miert.

Within the Commission itself, opposition to the proposals has come from Consumer Affairs Commissioner Emma Bonino and Economics Commissioner Yves-Thibault de Silguy.

Bonino argues that customers will face confusion if shops are allowed to charge what they like for payments using credit cards, while De Silguy's staff are worried that the single currency could be blamed for any new charges which coincide with the introduction of the euro.

These disagreements have helped to stall any decisions, even though discussions on the credit card issue began more than five years ago.

EuroCommerce, the Brussels-based lobby which represents retailers, last year attempted to force the pace by lodging a formal complaint about the non-discrimination rule and the inter-bank charging system for credit cards which forces shops to bear the burden of bank transaction costs.

The banks, which support major credit cards such as Eurocard and Visa, are opposed to any changes. They are worried that shoppers will shun credit cards if they suddenly find they are being forced to pay extra for using them.

Europay International, the firm behind Eurocard and Mastercard, cites the ongoing strike by Belgian security guards, which began after two employees were killed in an armed robbery on a cash-transfer vehicle, as another argument against penalising shoppers who pay by credit card.