It has always happened: when the level of Interchange Fees on card payments is regulated by the authorities, the banks and the cards schemes introduce additional fees in all sorts of ways. In Europe the latest example started in December 2015 when the EU implemented their Interchange Fee Regulation (IFR) which put limits on the level of interchange that could be charged on debit and credit cards. Since then Visa and MasterCard have introduced various fees to generated additional income.
CMSPI white paper
CMSPI is a team of expert consultants and analysts that advise merchants on how to optimise and reduce their payments costs. The recent white paper from CMSPI on Payment Scheme Fees revealed that:
- Card schemes are very profitable
Source & Copyright©2018 - CMSPI
- Card schemes have been increasing their share of the merchant service charge take;
- Source & Copyright©2018 - CMSPI
CMSPI analysis found that:
- Visa has already increased scheme fees in Europe and moved towards a U.S.-style pass-through pricing model
- MasterCard could have fostered dependence before increasing prices
- Mastercard may have set a precedent for other card-scheme products such as digital wallets and Secure Remote Commerce frameworks.
CMSPI are concerned that, “Interchange Fee Regulation and the Visa Europe takeover have created a perfect storm for scheme fee increases in Europe, undoing much of the work of the European Commission before it has had chance to properly benefit all merchants and consumers.”
They recommend that, “In order to prevent further deterioration of the IFRs’ gains, we are calling on scheme fees to be brought under consideration at the IFR review in 2019.”
CTMfile take: Corporates need to pressure their EU MPs to get involved and bring scheme fees within the IFR remit.
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