European Commission Moves Against MasterCard Interchange Fees
This morning, Neelie Kroes, European Commissioner for Competition Policy, announced that the European Commission has "adopted a decision that MasterCard's multilateral interchange fees, or MIF, for cross-border payment card transactions with MasterCard and Maestro branded debit and consumer credit cards in the European Economic Area (EEA) violate EC Treaty rules on restrictive business practices." MasterCard has six months to comply with the Commission's order to withdraw the fees. A number of documents about the decision are available online in PDF form including her speech, a press release, and an FAQ.
With respect to Visa, Kroes went on to add: "Let me finally say a few words regarding the other large payment card scheme in Europe, VISA. Back in 2002, the Commission adopted an exemption decision concerning VISA's MIF. This exemption expires in a few days, on 31 December and from that moment on VISA will be responsible to ensure that its system is in full compliance with EU competition rules."
Kroes said that this new ruling will be a Christmas present for European consumers who will see lower prices in stores – when in reality, the EC has no idea how this business actually works. They should’ve looked at the example of Australia, where regulators also forced interchange fees down: merchants didn’t pass along anything to consumers and banks ended up charging higher fees and cutting reward programs for consumers.
For more of my views, see: http://www.thecatalystcode.com/theconversation/blog/2007/12/20/eu-to-mastercard-bah-humbug/
Posted by: David Evans | December 20, 2007 at 09:27 AM