The European Union will ban merchants from surcharging electronic
payment transactions starting in 2017. However, whether that ban will extend
from consumer credit cards to corporate ones will depend on individual EU
member states. And airlines may be content to keep surcharging until each state
determines how it will enact the EU's directive.
The ban is part of the second Payment Services Directive,
known as PSD2, which the European Commission adopted in October 2015. It's a
follow-up to the 2007 Payment Services Directive now that new payment types,
including Web payments, have entered the landscape.
"In practical terms, card payments with all popular
consumer cards may not be surcharged, whether these payments instruments are
used in the physical shops or online and including in the crossborder-transaction
context," European Commission policy officer of financial services Krzysztof
Zurek wrote in an email to BTN. "The
only category of payments that may be surcharged are payments with
business/corporate credit cards and with cards issued by so-called three-party
schemes, which are used in Europe mostly for business purposes."
A directive, unlike a regulation, however, leaves it up to individual
EU member states to decide how to honor the requirement. That means any given
country can introduce further surcharging limits, including a complete prohibition
that would apply to corporate cards.
Airlines, which routinely surcharge transactions, may be
waiting to amend their policies until individual countries indicate how they'll
apply the directive. British Airways, for example, told BTN simply, "We are aware of the directive and always fully
comply with our legal obligations."
Airline credit card surcharges proliferated
in 2011 as legacy carriers implemented practices common among low-cost
carriers. The spike caused the travel industry and the United Kingdom to review
the procedure.
Interchange Fees Play
A Part
PSD2 achieves the ban by applying two existing EU
regulations, one of which forbids merchants from surcharging cardholders if the
transaction falls under a new interchange
fee rule. That regulation, which took effect in December, caps the amount
card issuers like AirPlus, MasterCard and Visa can charge merchants, which
often pass along such costs to cardholders. Thus, if the amount merchants have
to pay issuers is capped, PSD2 is forbidding them from passing along a
surcharge to customers.
Corporate cards and three-party-network cards like American
Express and Diners Club were ultimately excluded from the cap. Wording in the
regulation makes it unclear whether individually billed corporate cards are
subject to the cap. If they're not, there is no cap on the fees issuers charge merchants
for accepting corporate cards. Thus merchants would be free to surcharge corporate
cardholders, as well.
If, however, a particular EU member state opts to extend the
ban on surcharging cardholders to corporate cards, then corporate cardholders
would not face any fees from merchants even if the merchants continue to pay
uncapped interchange fees.
PSD2 also introduces "strict" security
requirements for processing payments and protecting consumers’ financial data, promotes
competition by opening the EU payment market to competitors and enhances
consumer rights via a no-questions-asked right to a refund for direct debits,
among other measures.