European Commission deputy director-general for competition Nadia Calvino said last week that Visa and MasterCard could do more to reduce the interchange fees that retailers pay on credit and debit card transactions.
Speaking at a payments conference held in London, Calvino said that the present economic climate meant the banks’ and card schemes’ concerns that a reduction in fees would not be passed on to consumers through reduced prices was misplaced.
Calvino said: “It is the right moment for MIFs [multilateral interchange fees] to go down for maximum consumer benefit. Competition is fierce in every market.”
The Commission believes the way interchange fees are set constitutes a restriction of competition, so it must monitor whether the market efficiency gains of the fees outweigh competition concerns.
MasterCard Europe region counsel Christoph Baert said that the fees increase the number of banks willing to issue cards. He added that if they were removed it would lead to an average increase in cardholder fees of €100 (£86.80) for each UK family.
However, the card scheme has worked with the Commission to reduce certain fees and improve transparency to merchants.
The new methodology for the calculation of cross-border MIFs – that MasterCard said it would introduce earlier this year – began to be used at the start of this month. It has led to a reduction of between 62 per cent and 85 per cent in the MIF charged on cross-border credit card transactions, reducing it to 0.3 per cent of the transaction charge. The cross-border debit
card MIF has been set at 0.2 per cent, giving a minimum 50 per cent saving on the way the fee was calculated previously.
MasterCard has also improved the transparency of the domestic interchange fees that it levies on credit and debit card transactions within the European Union, making them available on its website.