EU credit card rules could impact corporate payment schemes

Paul Snell is managing editor at Supply Management
14 April 2015

EU legislation to cap fees charged by consumer credit card providers will affect corporate cards, which could lead providers to introduce transaction fees to cover lost margins.

But, according to one major card issuer, most buyers would rather pay a transaction fee than have to change their internal processes.

The law - the Regulation on Interchange Fees for Card-based Payment Transactions, which is currently awaiting final approval in Brussels - will cap interchange fees at 0.3 per cent on consumer credit cards, and at 0.2 per cent on consumer debit cards.

A number of exceptions to the legislation have been agreed, including a carve-out for corporate cards. But the legislation’s definition says a corporate card needs to be charged against a corporate account (sometimes known as ‘corporate pay’). So the cap will apply to cards that are charged to an individual account (‘individual pay’).

AirPlus International said it would discuss with national regulators when transposing the European law if these ‘individual pay’ cards will be exempt.

If not, said AirPlus CEO Patrick Diemer, the company would introduce a yet-to-be-determined transaction fee for cards covered by the cap.

But, he said at a press briefing, most customers would prefer to pay more if it means they don’t have to tear up their internal processes.

“Rather than switching to ‘corporate pay’ they will prefer a card which keeps their internal corporate processes as they are today. Basically the buyers in our industry prefer a card which is going to be more expensive but can work under established processes,” he said.

“Before we had the discussion with our customers I was thinking many would move to corporate pay, but I was surprised to learn how reluctant they are to change internal processes,” he added.

But there is a more positive development from the legislation for buyers. Surcharging will be prohibited on consumer credit cards, and this could work out cheaper for the company even with a transaction fee.

“That’s a commercial justification to have a consumer regulated credit card for a corporation, because the corporation will not face any surcharges for its travel,” said Diemer.

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