The European Council of Ministers this month exempted commercial cards from a proposed European Union regulation to cap interchange rates at 0.3 percent, leaving the European Union's three lawmaking institutions split on the issue.
The European Commission, which originally framed the regulation, and the Council of Ministers (representing the governments of member states) want commercial cards exempted, but in April 2014 the European Parliament unexpectedly voted to include them.
The three institutions have started negotiations, known as a trilogue, to break the deadlock. With two meetings scheduled for the next fortnight, sources told Business Travel News that the Italian government, which holds the EU presidency, is keen to finalize the regulation before Christmas, although other, even more contentious, points of difference unrelated to commercial cards make such a rapid outcome unlikely.
Typical interchange fees on Visa and MasterCard commercial cards in Europe are 1.5 percent, so observers have suggested a cap could drastically affect the economics of the sector, leading to enforcement of annual fees for clients, the ending of rebates and charges for services such as management information.
However, another complication is that American Express would likely escape such a cap because it operates what is known as a three-party model, which means that technically there are no interchange fees between card issuers and acquirers since Amex acts as both.
The Council of Ministers' version of the regulation clarifies that it does not apply to three-party card schemes, although it partially tightens up exemptions for companies like Amex when they operate under license with other banks or with co-branded partners such as airlines.
The Council's version also tightens the definition of commercial cards, although its position has shifted since last month when reportedly it considered narrowing the scope to include only cards carrying corporate liability. Now the definition is tied more generally to the purpose of the card and the reclamation of expenses.
According to the Council's definition, a commercial card is "any card-based payment instrument issued to undertakings or public sector entities or self-employed natural persons which is limited in use for business expenses where the payments made with such cards are charged, directly or indirectly, to the account of the undertaking or public sector entity or self-employed natural person." A further clarification explains that indirect charging of business expenses means, for example, submitting an expense report for reimbursement.
AirPlus International senior manager for corporate strategy Michael Heilmann told BTN: "From what we understand, this definition would probably be acceptable to us, although it depends on how the regulation would be translated into business rules when implemented by member states."