Commercial Card Confusion Heats EU Swipe Fee Debate

Visa and MasterCard are gearing up for regulations set to come into effect next month that cap the interchange fee rate at 0.3 percent per credit card transaction, but according to one Visa executive, these rules could have adverse effects on the corporate population.

Reports by Business Travel News last Friday (Nov. 13) highlighted the remarks of Visa Europe Director of European Affairs Marc Temmerman, who sounded off on the impending interchange fee regulations in a blog post last month. According to reports, Temmerman predicts that the policy will lead to fewer corporate card offerings for business customers in Europe and force them into third-party scheme options that see the same bank as issuer and acquirer.

According to Temmerman’s remarks, the negative impact of swipe fee caps on commercial cards stem from the purchasing behavior of the users of these products.

“Given that a very substantial part of corporate cards are based on individual billing, mostly combined with joint and several liability between cardholder and employer, many issuers will reassess the business case for offering such cards and the additional services (e.g., reporting) they require,” he said in his blog post for the European Payments Council.

“Indirectly, this would impact their corporate customers who may have no other choice but to seek three party scheme-based alternatives,” the Visa Europe executive added.

Reports said that while regulators initially excluded commercial cards from their proposed interchange fee caps, recent changes to the legislation led to confusion due to the way lawmakers define a corporate card. The wording says a corporate card is one used solely for business expenses, whether billed to an employee to later be expensed out or billed directly to a corporate account.

Some analysts said that card issuers may begin to issue “corporate cards” to consumers for non-business expenses. Lawmakers have since reworded the phrasing, reports said.

[bctt tweet=”Card issuers may begin to issue “corporate cards” to consumers for non-business expenses.”]

Weighing in on the debate, Temmerman wrote, “whether cards are individually billed to the cardholder (who will then be reimbursed by his employer) or directly billed to the account of the business itself does not alter the nature of a genuine commercial card.”

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