The US interchange fees reduction proposal is similar to the measures that retailer lobbies want to be adopted in Europe. The large retailers are pushing to reduce interchange fees, payment networks are trying to arrange a settlement and the national authorities are trying to take part on regulation by adopting anticompetitive measures, but it seems there is no way to reach an agreement.
In Europe, the case study is similar. The European Commission wants to regulate interchange fees. However, it is taking time to adopt such measures aimed to balance the market since several studies show the opposite may happen: it could finally harm consumers. The 2005 Spanish experience demonstrates that consequences have been negative for consumers, who have directly suffered an increase in costs, charges, fees and prices.
The truth is that nothing is really working in US nor in Europe. Ultimately, the banks and retailers share the same interest–their shareholders and bonuses. If the regulators finally go against Visa and MasterCard interests, they need make sure that the money doesn’t just end up in someone else’s pocket while the final price of the reduction is paid by consumers.
Last year Visa and MasterCard and the banks reached an agreement in the US to pay merchants who sued for allegedly fixing the fees for the use of the card. But retailers rejected the deal, arguing that it does not solve latent concerns about setting rates.
Under the settlement, Visa, MasterCard and the banks agreed to pay $6.05 billion to merchants and temporarily reduce interchange fees $1.2 billion. Visa and MasterCard also agreed to drop their bans on surcharging customers who pay with credit cards. The settlement would eliminate all future antitrust actions and other claims. Both payment networks wanted to end with the process that has taken over eight years.
A US retailer rejected the proposed agreement settled by Visa and Mastercard. Many of the US retailers oppose to any agreement because of lack of transparency of the system.
Payment groups launched a counter-attack, asking US Judge John Gleeson to dictate that the interchange fees are not a violation of federal antitrust law, according to the complaint filed in the judicial district of Brooklyn.
On the other hand, in Europe, the market is patiently waiting for the Commissions regulation to come out and check the consequences it may have in the market and on consumers. The US agenda may explain the delay of the European Commission proposal to regulate interchange fees.