Commission wants lower prices for credit cards


According to a preliminary report into the payment card industry published on 12 April 2006 by DG Competition, the sector is in breach of EU antitrust rules.

“The payment cards industry in Europe remains national and some local players are preventing competition from developing”, said Competition Commissioner Neelie Kroes.  

The report identifies large price differences as one of the main problems. In some EU countries, consumers pay 100 % more for Visa and MasterCard services than in other countries.  Business charges can vary across the EU-25 with up to 500 % for Visa and 650 % for MasterCard.  Furthermore, SMEs pay up to 70 % more for the use of payment cards than large companies. These findings plus high profits of € 1.35 trillion in 2004 by the payment card industry raise the Commission’s concern that these markets are not yet competitive.

Furthermore, the report reveals several structural, technical and behavioral barriers to market entry such as different technical standards within the EU, which prevent service providers to operate on a European scale, banks dealing jointly with retailers, instead of competing or agreements between local banks, whereby costs for new entrants may increase.  

According to the Commission, the EU economy could save between € 50 and € 100 billion per year, if the payment card industry were more integrated and competitive and cross-border payments as easy as national ones.  

Visa spokesperson
told EURACTIV: “Four years ago the European Commission gave an exemption for the system of setting Visa Europe’s “interchange” […] based on principles of objectivity and transparency.  […] Existing differentials between Member States reflect numerous factors including levels of market maturity, market size, the nature of different products in different countries, etc. Attempts by regulators in individual European countries to intervene in the setting of interchange rates run counter to the drive towards a single market for card payments.” 

, the European retail, wholesale and international trade representation to the EU, welcomes the main conclusions of the Commission’s sector inquiry on payment cards systems.  Syvier Duriewu, Secretary-General of EuroCommerce said, “the Commission’s findings confirm what we have been arguing for years: the payment card market is highly uncompetitive and lacks any real transparency”.

Commenting on the European Commission's report, Liberal Democrat Competition Spokesperson, Sharon Bowles MEP, said: "The Commission's preliminary report is to be welcomed. Consumers and businesses have been getting a rough deal for far too long on credit cards.” She added that "unless the credit card companies fall into line they are likely to face the consequences in the form of anti-trust legislation."

In June 2005, the Commission decided to launch a sector inquiry into retail banking and business insurance to assess whether there is enough competition in these markets to deliver full benefits to consumers and SMEs.

  • Until 21 June 2006: public consultation on the Interim Report on Payment Cards and Payments Systems; the Commission will then consider to take possible actions under the EC Treaty antitrust rules
  • July 2006: Commission publishes an interim report on current accounts 
  • December 2006: Commission publishes final report on sector inquiry into retail banking and business insurance.

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