On Tuesday, the European Parliament voted in favor of a new bill that caps the processing fees retailers pay on debit and credit card transactions. The bill received overwhelming support, passing with 621 votes for and only 26 against.
The reformed legislation would cap fees for credit cards at 0.3% of the transaction and debit cards at 0.2%, and will also give merchants the opportunity to accept only consumer cards if they choose. The European Commission reports a potential savings of €6 billion (euros) or $8.43 billion in U.S. dollars for retailers in hidden fees, as well as a €730 million savings for consumers.
"The legislation is good for consumers, good for business and good for Europe. It will lead to lower prices and visibility of costs for consumers," the EU's Competition Commissioner, Margrethe Vestager, told the BBC.
While this could be good news for businesses and consumers in Europe, there is no guarantee that merchants will pass their savings onto the consumers.
The Durbin Amendment provided for a similar "cap" in America three years ago, but reports from October, 2014 showed that 94% of consumers have not seen a price drop as a result of the legislation. 16% of consumers said they were issued surcharges for debit card purchases even after the Amendment. It is still unclear if the same fate will come of Europe.
The new law is expected to go into effect in October of this year.