Commission, card companies still differ on ‘interchange’ fees

Commissioners and credit card industry representatives have stressed the importance of the Single Euro Payment Area (SEPA) becoming a reality from 2008 but maintained different assessments over the relevance of credit card interchange fees.

Speaking at a Eurofi conference on 3 December, Commissioner Kroes reiterated that the issue of interchange fees was “top of the agenda both for the Commission and the payments industry”. She argued that abolishing such fees was “definitely possible” if they proved not to be in the interest of consumers. 

Interchange fees are paid by the merchant’s bank to the cardholder’s bank at any point-of-sale transaction using a credit card, such as Visa or Mastercard. 

However, the Commission is yet to issue its decision in a case against MasterCard over interchange fees, which should give some guidance to the industry, she said. Each interchange, however, had to be assessed on a case-by-case basis, Kroes added. 

Speaking at the Eurofi conference in Brussels, Visa Europe chief executive Peter Ayliffe said the creation of a pan-European payments area would be threatened if regulators tried to tamper with the functioning of multilateral interchange fees or even abolish them. 

Ayliffe further argued that without these fees, the four-party system on which card payments rest would not function and the industry would have neither the funds nor the incentive to invest in new SEPA products. Any change to the fee system could even ultimately lead to a return to greater cash use, to which none of the parties present aspire, Ayliffe warned. 

Despite the problem with interchange, Kroes praised SEPA as an “excellent, pro-competitive project”. This statement was also supported by Internal Market Commissioner Charlie McCreevy, who saw in SEPA “a key component of a competitive economy”. 

The creation of the Single Euro Payment Area (SEPA) is set to remove obstacles between national payment systems and reduce the cost of cross-border payments for consumers. 

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