We aren’t always surprised when a Maltese vendor doesn’t accept our plastic. We may be understanding or suspicious, but as the world becomes cashless and more convenient, we expect to buy anything with our smartphones and cards. Many small or medium-sized enterprises (which make up 99% of the Maltese economy) are forced to comply in order to compete, even though the charges are often transferred to the consumer.
On the 12th January 2018, the EU Commission published a press release announcing the revised Payment Services Directive (PSD2), which bans surcharges for consumer debit and credit card payments, both in shops and online. This includes payment methods linked to your card, such as PayPal or Apple Pay.
The new rules could save more than €550 million per year for consumers across the EU.
Contactless payments are almost too good to be true. The fact that it requires no PIN or signature is just as dangerous as its convenience to just tap your card on the reader and pay for something so mindlessly.
The revised rules step up security so that consumers are protected against theft, meaning that if your contactless debit card is found and misused, you are entitled to a refund in Euros with “no questions asked”.
Banning additional charges on electronic payments also means that airlines such as Ryanair (which usually charge 2% on credit cards) can no longer do so.
This is not the first time that the EU has imposed restrictions on payment charges. With the new approach, it is estimated that 95% of all debit and credit card payments in the EU will be covered.
The rules were made applicable as of 13 January 2018 however Member States, like Malta, will need to transpose this Directive to national law for it to take full effect. One of these measures entailed the replacement of magnetic stripe local cards with Chip and PIN cards from 31st January onwards to secure the customer authentication process.
As it is a national law change, the new rules will continue to apply for companies based in the UK, even after Brexit.
It is still very possible that businesses may look to replace the fees with other hidden charges to absorb the costs associated with card payments (using the infamously vague term they love: “service charges”) rather than adjusting the price.
However, scrapping these card surcharges will hopefully remove the element of surprise at the end of an online purchase and make it easier for us to compare prices of flights, hotels, tickets and more.
This is part of a wider initiative by the EU to remove the key differences between our online and offline worlds. According to the EU Commission, creating a Digital Single Market will nurture the proper conditions for investments and trade to flourish.