MEPs have voted by a majority of 621 votes to 26 and 29 abstentions to cap the charges banks can charge retailers to process payments.
The new rules will mean that a maximum fee of 0.2 per cent of the value of a transaction could be levied on cross-border debit card transactions and member states will have the ability to set a maximum fixed fee of €0.05 per transaction, after a five year transition. Credit card transactions fees will be capped at 0.3 per cent of transaction value and member states will be able to set lower fees for domestic transactions.
"The EU wants consumers to believe a command from Brussels can force businesses to provide something for nothing" - Steven Woolfe
There was a broad welcome for the vote which it is hoped will result in lower cost for consumers and retailers.
Parliament's rapporteur on interchange fees for card-based payment transactions Pablo Zalba said the legislation "combined with the upcoming payment services directive, will establish a level playing field for payments across Europe".
The Spanish EPP MEP added, "It should enhance fee transparency, stimulate competition and enable both retailers and users to choose the card schemes that offer them the best terms".
Sophie In't Veld, shadow rapporteur on the legislation, said "For too long, shoppers and businesses have had no choice but to accept opaque, unreasonably high fees charged by banks and card providers."
However, the ALDE deputy warned that "there is still much to do as EU Governments have enforced some exemptions".
Fellow shadow rapporteur Bas Eickhout also welcomed the result of the vote, saying the capping legislation will "provide an antidote to the Visa and MasterCard duopoly".
The Greens/EFA deputy noted, "While the final agreement includes some loopholes, following intense lobbying by banks and credit card firms, these are not written in stone and will expire."
Parliament's EFDD group dissented from the near universal welcome for the legislation. Steven Woolfe said the vote was "a propaganda move by the EU to try to make people believe that eurocrats can regulate costs out of existence".
He said that the experiences of Australia, Spain and the United States showed that "the consumer always pays".
The British MEP added, "The EU wants consumers to believe a command from Brussels can force businesses to provide something for nothing. It can't"
Woolfe predicted, "Major retailers will be the big winners in this windfall once it is forced onto credit card companies and banks across the 28 member states."
He concluded that the legislation was an attempt by the EU to protect "big business at the expense of small and medium enterprises".
The capping rules have a number of exemptions including commercial card payments and cash machine withdrawals are also not covered by the legislation. Following the vote, the new rules must be endorsed by the council of ministers before taking effect.