SURCHARGING – PROPOSED PROHIBITION IN DUTCH LAW
On 7 January 2016 the proposed amended legislative bill on the prohibition of a surcharge for the use of payment instruments by consumers (Wet verbod toeslag gebruik betaalmiddelen bij consumenten) was published. The initiator of this legislative bill (which is an initiative of a parliamentarian, rather than a government proposal) strives for its entry into force by 1 July 2016. Since the proposal is not controversial, it is expected to obtain parliamentary approval without much discussion.
Present legislative framework
Current European and Dutch law allows a beneficiary/ payee to levy a surcharge on a payer for the use of certain payment instruments (e.g. a credit card). According to the Payment Services Directive (EC) No. 2007/64 (PSD-I), Member States are allowed to forbid or limit the right to request charges, taking into account the need to encourage competition and promote the use of efficient payment instruments. The Dutch legislator has not yet made use of this discretion.
Following the Directive on Consumer Rights (EU) No. 2011/83, fees charged to consumers must not exceed the actual cost of the use for the merchant. This restriction is implemented in Article 6:230k(1) of the Dutch Civil Code (DCC).
The Regulation on interchange fees for card-based payment transactions (EU) No. 2015/751 (IFR) contains – among other things – provisions limiting interchange fees for consumer debit card transactions to 0.2% of the transaction value and with regard to consumer credit card transactions to 0.3% of the value of a transaction. These particular articles entered into force on 9 December 2015. Pursuant to those provisions, Member States are allowed to define an even lower interchange fee cap than the fees provided for in those articles.
An interchange fee is a fee paid for each transaction directly or indirectly (i.e. through a third party) between the issuer and the acquirer involved in a card-based payment transaction. The net compensation or other agreed remuneration is considered to be part of the interchange fee.
The revised Payment Services Directive (EU) No. 2015/2366 (PSD-II) entered into force on 12 January 2016 and will repeal PSD-I with effect from 13 January 2018. Member States must adopt and publish the measures necessary to comply with PSD-II by 13 January 2018.
PSD-II states that “[…] Any charges applied shall not exceed the direct costs borne by the payee for the use of the specific payment instrument.”
Pursuant to PSD-II, Member States are under an obligation to ensure that the payee does not request charges for the use of payment instruments for which interchange fees are regulated under Chapter II of IFR and for those payment services to which Regulation (EU) No. 260/2012 applies.
In the preamble to PSD-II, Member States are explicitly called on to prohibit surcharges for payment transactions of which the interchange fees are regulated in IFR, prior to the implementation of PSD-II. Furthermore, as in PSD-I, PSD-II allows Member States to prohibit or limit the right of the payee to request charges, taking into account the need to encourage competition and promote the use of efficient payment instruments.
The proposed legislative bill
The amended Explanatory Memorandum to the proposed bill on the prohibition of surcharges for the use of payment instruments by consumers, states that it is exceptionally difficult (if not impossible, due to the confidential nature of the underlying agreements) to monitor compliance with Article 6:230k (1) DCC which makes it possible for merchants to overcharge consumers. Merchants indeed frequently overcharge consumers. The Netherlands Authority for Consumers and Markets (Autoriteit Consument en Markt), which enforces Article 6:230k (1) DCC, rarely takes action against overcharging.
The amended proposed bill envisages not only prohibiting charging sums exceeding the actual cost, but prohibiting merchants from charging consumers for the use of a specific payment instrument entirely. Among other arguments, the prohibition of surcharging would promote the use of efficient payment instruments, as merchants are unable to steer towards a certain payment instrument and the consumer would be able to choose between payment instruments on a cost-neutral-basis.
The envisaged consequences
In the event that the proposed amended legislative bill passes through the Dutch House of Representatives (Tweede Kamer der Staten Generaal) in its current form and subsequently in the Senate (Eerste Kamer der Staten Generaal), subsection 1 of Article 6:230k DCC will be amended, along with other articles. As a result of the proposed amendment, merchants will generally be prohibited from requesting a fee from a consumer for the use of certain payments instruments. The prohibition of surcharging will be enforced by the Netherlands Authority for Consumers and Markets. A complete prohibition will be easier to enforce than the existing legislation. In the event that a merchant breaches the prohibition, the Netherlands Authority for Consumers and Markets may impose a penalty of up to €450,000 per violation.
As examples of goods and services whereby surcharges for the use of specific payment instruments are frequently imposed, the amended Explanatory Memorandum to the proposed legislative bill refers explicitly (but not exclusively) to airline tickets, electronics, tickets for events and (packaged) travel. Transactions with payment cards issued by three – and four-party payment card schemes (e.g. Diner Club-cards and American Express cards) are also envisaged to be within the scope of the amended proposed bill. However, the laws regarding surcharges concerning the use of commercial cards remain unaffected by this bill.