European Commission Consultation on Inter-Regional Interchange Fees, CMSPI’s Response09th January 2019
Please find below CMSPI’s response to the European Commission’s consultation request addressing Visa and Mastercard’s inter-regional interchange fee commitments.
Inter-regional fees have been a large burden to merchants for many years, so we are pleased to see the European Commission addressing these issues. In our consultation response, we highlight the importance of such a review and the material cost saving of €770 million per annum it could have for merchants across Europe. Read more.
4 Key Takeaway Points For Merchants
Inter-regional interchange fees
Great news! The European Commission has recognised that inter-regional fees have been a large burden to merchants for many years, in fact, our analysis suggests that Visa and Mastercard’s commitment to reducing these fees could mean cost reductions of up to €770 million annually for merchants across Europe.
Card Present vs Card Not Present Transactions
Card Not Present transactions have been separated from Card Present transactions in these commitments, and we think it potentially sets a dangerous precedent.
Proposed Time Period
The commitments cover a time period of five and a half years. Although this is substantial, we would have preferred the commitments to be onboarded onto the existing Interchange Fee Regulation (IFR).
Scheme Fees Not In Scope
Worryingly, scheme fees have been excluded from the commitments. Inter-regional scheme fees are more than ten times larger than domestic or intra-regional scheme fees, so by isolating the review to interchange fees, the EC is only addressing part of the problem.
We commend the European Commission (EC) for investigating inter-regional interchange fees. To our knowledge, the EC is the first regulator to address these fees, which have been a large burden to merchants for several years.
We are pleased that card present (CP) transactions will be lowered to the regulated levels. Evidence from CMSPI’s client base suggests that this will deliver hundreds of millions of cost savings per annum for merchants across Europe.
Our research and economics department plays a key role in CMSPI’s extensive work within the merchant community. While a large part of the work we do is partnering directly with merchants, we also work independently within the wider payments market to advocate for fairer regulation and encourage a healthy payments landscape that works well for merchants.