Uncertainty about the fees European credit card operators can legally charge shops is delaying investment in new types of card, Visa Europe and MasterCard said this week.
The European Union's competition watchdog is looking at whether MasterCard is abusing its large market share by setting unreasonably high "interchange" fees for shops that accept its credit cards.
The verdict, which is also likely to affect Visa Europe, may be delayed until 2008 due to what retailers have said is a disagreement between EU competition and internal market authorities over the timing and extent of changes to the structure of fees.
This uncertainty makes it hard to invest in new card services that the European Central Bank (ECB) and EU officials want launched off the back of the single euro payments area (SEPA), which starts in January, Visa Europe's chief executive said. "The real plea is that we need certainty on what the economics are under which we will operate with payment platforms across Europe," said Visa Europe chief executive Peter Ayliffe at Frankfurt's annual Euro Finance Week conference.
"We've been waiting for years to actually get established what interchange [ fees] should be. Until we get that sorted . . . I don't think we will see the benefits we want out of SEPA," he continued.
He cited "wave and pay" contact-free cards, which can be used to pay for low-value goods in under a second, and are currently available in London, as products that could be rolled out more broadly.
Rival operator MasterCard shared Visa Europe's view.
"The uncertainty created by interchange is a concern," said MasterCard Europe's regional manager Alfredo Gangotena.
Interchange fees typically amount to 1 per cent of a purchase, and have credit and insurance charges bundled in on top of the pure cost of the transaction.
EU Competition Commissioner Neelie Kroes is thought to want to allow retailers to pay just the transaction charge, while Internal Market Commissioner Charlie McCreevy fears ditching interchange fees would make new cross-border cards unviable.
Retailers say interchange fees are too high, but their lobby group, EuroCommerce, said last week that the delay in the EU decision was nonetheless hurting the implementation of SEPA.
ECB executive board member Gertrude Tumpel-Gugerell, speaking on the same panel as the card operators, said almost all banks were ready for SEPA's January 1st start, but that more needed to be done to inform consumers.
SEPA is a key part of the EU's attempt to create a more consumer-friendly single market. Consumers in the bloc of 490 million people will be able to authorise payments in euros and use debit cards anywhere in the 27 member states from a single bank account. - (Reuters)
