The European Commission published its findings from an in-depth 18-month inquiry into the retail banking and payment card sectors. The final report does not call for reducing the level or scrapping the non-negotiable fees charged by card companies. On payment cards, the commission reported ‘large variations in merchant and interchange fees for payment cards, barriers to entry in the markets for payment systems and credit registers, obstacles to customer mobility and product tying.’ The report said that while not arguing for zero interchange fees, the operation of this system in some payment networks raises concerns. The commission said there are large variations in interchange fees between banks across the EU. The report highlights concerns over lack of cross-border competition, although implementation of SEPA should eliminate some of the barriers to competition. In the past, EU competition commissioner Neelie Kroes warned that the elimination of the fees altogether remains one of the options considered by the EU executive. In a news briefing, Kroes said “As competition commissioner, I will not and cannot go further to specify what would be acceptable levels”. Credit card companies have staunchly supported interchange fees as being crucial to the workings of the payments industry. Credit card companies, such as Visa and Mastercard argue that setting optimal level of interchange fees, arranged by themselves, is a delicate balancing act. If tampered with, would destabilise the efficient workings of the market. They also refute suggestions that the system generates excessive profits for credit card companies. Xavier Durieu, Secretary-General of EuroCommerce, commented, ‘Today’s report by Europe’s competition watchdog is yet another condemnation of the tricks Visa, MasterCard and the banks behind them play to maximise their income at the expense of Europe’s shoppers. We are looking forward to the Commission tackling these issues head on its ongoing anti-trust actions against MasterCard and Visa.’
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