- Euro notes and coins are legal tender and retailers can only refuse them for reasons of “good faith” (for example, the retailer has no change).
- Retailers should only refuse high-denomination banknotes in “good faith” (for example, if the value of the note is disproportionate to the purchase)
- No surcharges should be imposed on cash payments.
- Banknotes stained by the Intelligent Banknote Neutralisation System (IBNS) remain legal tender but should be returned to national central banks (as they likely come from a robbery).
- Retailers must accept 1 and 2 eurocent coins in payment.
Sensible policies for a better Eurozone, you might think. All it the recommendation is doing is simply enforcing the rather obvious rule that euros are legal tender. Except for the bit about surcharging.
The commission also warned that retailers should not impose surcharges on the use of cash instead of credit cards, a rather unusual option that to this date has not actually been imposed by any shops, but the possibility of doing so does exist in theory and Brussels wants to stamp out the idea before it materialises.[From EUobserver / Commission frowns on shop signs that say: ‘€500 notes not accepted’]
I don’t see why retailers shouldn’t surcharge. Above ten euros, say, the marginal cost of debit cards is less than the marginal cost of cash (for legitimate businesses who pay their taxes) so why shouldn’t the retailer should be able to direct payment choices? And if they also want to surcharge card payments under €10, let them. The customer can then decide which shop to go to.
Incidentally, the surcharge on €500 notes could be quite high, like €20 or something. Why? Because the people with €500 notes are criminals, so they won’t care about the €20 since they already save €400 on taxes.
But what’s the problem? The essence of it is that shops will be forced to accept €100, €200 and €500 euro notes and 1- and 2-euro cent coins. Why? Well, because in many countries the shops don’t want them. In some countries (eg, The Netherlands and Finland) the retailers and the public seem to have, in a decentralised fashion, decided to abandon the 1- and 2-cent coins. They are nothing but a hassle and do nothing to assist commerce. At the other end of the scale, retailers in many countries will not accept high-value notes, partly because they don’t want to make change and partly because they are worried about counterfeiting. After all, if you are a corner shop and you get stuck with a bent €500 note then you are €500 out of pocket: the ECB won’t take your counterfeit note and give you a new one. It’s worth paying 10 cents to the bank for a debit payment to avoid that risk.
I think this recommendation is plain wrong, but it doesn’t take economics into account. Part of the EU’s goal for payment systems should be economic efficiency and forcing your average tabac to take 500 euro notes does not contribute to that goal in any way.
These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]