A new EU regulation will limit the amount of fees the credit card companies can charge shops, etc. for credit card transactions to 0.3% (or 0.2% for debit cards).
The thinking is that the card companies ( they mention AmEx and Capitol One specifically) will now limit perks and rewards offered with cards, like cash back and travel benefits (companion fares, miles).
The only immediate impact I foresee is that vendors might be more willing to accept credit card especially for small amounts. Second, continues to support the idea that nothing is free. Someone always pay. At moment I don't see it spreading here because of the heavy, current, anti-regulations in Congress because this would require a similar regulation. It is a huge drop from 3 to 5% down to less than one percent. The difference has to be made up somewhere.
PS Had a second thought. It could mean that the credit card charges in Europe would not earn the same benefits/rewards that the card would earn in the US. That might push back to using more cash. Probably will lose the discount for cash that is often available in Europe and never in the US. A very mixed bag.
The 2 reward cards I carry to Europe which area: Chase Sapphire rewards(2x points on travel) and the Capital Venture rewards with double points on all do Not charge any foreign transaction fees.
The credit card companies will continue to count on human nature and easy money to tempt people to spend money they don't have and charge high interest. I've read some pretty frightening numbers recently about the average household credit card debt at 7200 in the US. Since many of us pay our entire balance monthly, that means that there are a lot of people with much,much higher debt giving the credit card companies plenty of profit.
The very sad thing is that once people get caught in the credit card debt trap, it is very hard to work their way out of it.
The report or article had nothing to do with credit card debit or foreign transaction fees. It is the fee that the merchant is charged when YOUR credit card is used at his/her establishment. It is a cost of doing business for the merchant or vendor.
That's right---it will benefit the merchants. And the credit card issuers will make less money from the merchants, so the thinking is that they will cut back on rewards for using the cards, like cash back or miles. The Brits are concerned about this and I wonder if we (US and Canadians) should be too.
Yes, Frank, but credit card companies have been using the ~5% to finance those "perks" like cash back and no exchange fees. I expect you'll see card companies discontinuing the cash back for foreign transactions and reimposing currency exchange fees for foreign purchases. It will be another reason to use cash from the ATM (hopefully Wells Fargo will still give me the two ATM withdrawals a month without exchange fees).
Wish we would do this in the US, so those of us who pay cash wouldn't have to finance the cash back or miles for others. Actually Federal law allows the merchants to charge customers for using a credit card (prohibits card companies from contracts that prohibit merchants from doing it) unless prohibited by state laws. Colorado law prohibits it.
Interesting article.....
You can be darn sure the credit card firms or merchants won't be losing any money as a result of these changes! They will find some other way to squeeze the consumer to sustain their profits.
This is typical Telegraph, because it something from the EU give it a negative spin.
It is actually pro-consumer anti-monopoly legislation to stop the banks taking too high a percentage. Currently the two credit card giants (Visa and Master Card) have a duopoly, both charge the same fees to the merchant, and ban the merchant from surcharging for credit cards.
One of the affects may be to increase the number of places that take cards, and decrease the number of "No Credit cards under €20" signs.
