The extent to which merchants pass along savings on interchange to consumers in the form of price reductions or other benefits proved to be a central issue on this panel, along with the distinction between regulatory goals and competition perspective on interchange fees.
Abel Mateus focused on the waterbed effect and concluded that consumers would end up paying more money in many European countries as the higher fees charged by banks would not be counterbalanced by price reductions from merchants.
Marianne Verdier noted that there was too much emphasis on price effects and concentrated on the impact on non-price dimensions of competition such as fraud risk and improvements in quality.
Finally, Frank Maier-Rigaud examined the different methods of regulating interchange fees in the context of the Commission’s case against MasterCard.
View the panel discussion here.
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