In the past eighteen months the Commission has ruled three times on the enforcement of competition rules in the payment card market. Visa on April 2011, MasterCard on May 2012 and now, at the end of 2012, against Groupement des cartes bancaires “CB” – France’s principal card scheme. On October 2012 the Commission also announced its intention to propose revisions to the Payment Services Directive and to propose new legislation on interchange fees for card payments – in order to enhance the functioning of the payments market in Europe.
Javier Perez, the president of MasterCard Europe shares the Commission’s view of a fully functioning payments market in Europe, but warns of unintended consequences of new legislation. He believes that, like in the United States, Austria and Spain, governmental intervention could actually be prejudicial for the payments market. “Recent experience has shown that this type of legislation could inhibit rather than encourage the very growth in electronic payments that the Commission wishes to stimulate, and stifle the benefits that electronic payments bring to society,” he declares.
He gives the example of his native Spain, where the reduction in interchange fees by more than 55% between 2006 and 2011 had a negative impact on consumers – an estimated € 2.35 billion increase in annual card fees, according to recent academic research, Perez explains.
Moreover, recent MasterCard research has shown that 75% of European consumers are worried they will bear the costs of an decrease in interchange fees, and almost half do not believe retailers will pass on fee reductions on to them.
Perez believes in the importance of a secure and competitive European payments industry, but not at the cost of consumers, “but the Commission must carry out a thorough and robust economic impact assessment of the consequences of the measures it intends to introduce, and use this to inform its thinking.” Moreover, he adds, “MasterCard fully shares the Commission’s vision for a secure, efficient, competitive and innovative European electronic payments industry. However, we hope that it ‘looks before it leaps’, and fully assesses the implications of its plans, before making a decision it – and European consumers altogether – could later on regret.”
Read the original blog post here.
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