Brussels, 19/12/2014 (Agence Europe) - Banks doubt that the agreement to cap multilateral interchange fees (MIFs) will be of any direct benefit to consumers.
The European Banking Federation (EBF) questions the impact of the political agreement reached by the Council of the EU and the European Parliament, wondering whether it will really lead to greater use of payment cards and a reduction in prices for consumers (see EUROPE 11221). In a press release, EBF comments: “Although European banks support the intention of this regulation, it can be questioned whether this will lead to increased payment card use or lower fees for consumers. The provisions of the regulation, which clearly favours retailers, could mean that consumers face higher costs and fewer benefits from using payment cards.” The French member of EBF fears that consumers will not reap any advantages from the new rules and is demanding a minimum two-year transition period to allow payments cards in France to be updated.
Visa Europe, an association owned and exclusively controlled by more than 3,500 European banks present in 37 countries, welcomed the greater clarity in the rules, but adds: “We continue to have serious concerns that the regulation will have unintended consequences, particularly for consumers, and that it could stifle future innovation. The decision to end the so-called Honour All Cards rule in particular will mean that the shopping experience for consumers could be seriously impacted if they are unsure whether their card will be accepted. As a result, there is a real risk that consumers could revert to less efficient and less secure means of payment such as cash. Retailers have lobbied hard for this regulation so we now call on them to ensure that they pass on all savings to consumers. Previous evidence from other countries such as Australia and the USA suggests that prices have not been reduced. The experience of those countries in fact suggests that consumers will be worse off as a result of higher card costs.”
Interchange fees for card-based payments are the fees that a retailer's bank pays to the bank that issues the payment card for the services provided by the issuing bank. MIFs of up to 1.5% are allowed in some member states, but banned in others. The Commission, consumer bodies and retailers say they generate excessive levels of income for Mastercard and Visa and at the end of the day, the costs are passed down the chain and lead to increased prices for consumers. (MB)