MasterCard Europe Announces Initiatives For SEPA

MasterCard hosted 250 leading European bankers at its fifth Annual Debit Conference this week, where they heard from regulators, industry leaders and financial services experts. The debate highlighted the fact that SEPA is critical to European competitiveness and that it will also create a new dynamic for banks and all other players in the payments sector, to guarantee European competitiveness into the future.

“After years of discussion, the industry is now engaged in positive action to introduce SEPA in 2008,” said Dr Alexander Labak, President of MasterCard Europe. “In delivering a harmonised debit experience, there is a unique opportunity at all levels of our industry to add value and efficiency. At MasterCard, we are providing active leadership in our work with European partner banks and the European Payments Council to deliver on these goals.

“Achieving SEPA is a critical step on the road to driving out the nefficiencies of cash. MasterCard continues to provide banks with the ammunition they need to win this 'war on cash', as evidenced by the launch this week of our breakthrough low value payment solution. This new generation product will substantially reduce the cost involved in processing low value transactions.”

MasterCard presented a range of critical SEPA initiatives, including:

• Pricing: Taking effect from 1 January 2008, MasterCard SEPA pricing structure will deliver a single, harmonised and transparent set of prices for both intra-SEPA and national transactions. This will deliver separation of brand and processing, aligning customer value to price through a tiered structure, enabling banks to achieve substantial economy of scale.
• Interchange: MasterCard is the first SEPA scheme to publicly announce a coherent, sustainable and straightforward SEPA interchange solution, applicable from January 2008. There will be a single SEPA interchange structure that will apply to all SEPA debit transactions, allowing market forces to ensure convergence over time, incorporating the economic benefits of EMV chip migration and the increased use of cards in place of cash.
• Processing: The result of €75 million in European processing investment which has delivered a solution that is SEPA-ready with its switching, standardisation and value-added capabilities. This investment, combined with economies of scale, will result in material cost savings for customers.
• Next generation products: A breakthrough low value payments solution that will be piloted by Royal Bank of Scotland Group - leveraging EMV investment and new contactless technology to dramatically reduce transaction costs, add speed and drive acceptance in the previously untapped low value payment category.

“We have the trust and confidence of Europe's most demanding banks and we're helping to facilitate the EPC commitment to deliver SEPA against the European Commission's and Central Bank's expectations. Moving from debate to delivery, MasterCard is placing SEPA in reach of Europe's banks and their customers,” Dr Labak concluded.