More On European Commission's Payment Card Inquiry
Tobias Buck reports from Brussels for the Financial Times on comments made yesterday by Neelie Kroes, the European Union competition commissioner, regarding the payment cards inquiry the European Commission is pursuing where she said the industry was making "outrageous profits" and operating in a closed manner. We also explore the specific questions the Commission is asking for comment on by the public.
The Commission has opened a 10 week consultation period soliciting public and industry comments on its Interim Report issued yesterday (PDF). Specially, the Commission is seeking answers to the following list of questions:
Financial analysis of the industry
- Are high merchant fees a competitiveness issue for the EU economy?
- Are there compelling justifications for the comparatively high level of merchant fees
observed in some parts of the EU25?
- In view of the apparent profitability of card issuing, is there a generally applicable
justification for substantial revenue transfers through interchange fees in card payment
systems?
- Are the high profits observed due to innovation or do they arise from some kind of
market power in a two-sided industry?
- What pricing practices, rules and legal provisions distort price signals to consumers and
the choice of the most efficient payment instrument?
- Would cost-based pricing promote the use of efficient payment instruments and how
could such pricing be implemented?
- Do currently existing pricing practices have a substantial negative effect on cross-border
card usage by consumers?
- What market structures work well in payment cards?
- What market structures donot appear to work well / deliver efficient outcomes?
- What governance arrangements can facilitate competition within and between card
payment systems?
- What governance arrangements can incentivise card payment schemes to respond to the
needs and demands of users (consumers and merchants)?
- What governance arrangements can allow minority participants or minority members to
receive appropriate information and participate appropriately in decision-making?
- What access conditions and fees are indispensable?
- To what extent is separation between scheme, infrastructures and financial activities
desirable to facilitate competition and efficiency?
- Are significant structural changes to be anticipated in the payment cardsindustry?
- What are the anticipated impacts on the industry of innovation and technological change?
Potentialsolutions to market barriers
- How can structural barriers to competition, which may arise for instance from the
integration of different functions within a payment system or from joint acquiring
ventures, be tackled?
- Are there compelling justifications for the identified possible behavioural barriers to
competition?
- How much needand scope is there for harmonising technical standards in the payment
cards industry? How large are the potential benefits and costs of harmonisation?
- What lessons (best practice) for the design of SEPA schemes can be learnt from existing
national and international payment systems?
- How could competition between schemes in SEPA be strengthened?
- Which structural and behavioural barriers to effective competition between banks and
payment service providers should be removed to achieve SEPA?
- What governance requirements should SEPA schemes meet?
- By what means can interoperable communication protocols, security and other technical
standards be achieved and certification proceduresbe limited to the minimum necessary?
- Do the removal of barriers to competition, the observance of pro-competitive governance
and the creation of interoperable standards require (further) regulation?
to be disclosed.
Add your comment... (note that all comments are reviewed before they're published)