Competition challenge to the market: the EC's proposals on interchange fees

It is difficult to see this batch of proposals (combined with its permissive stance to payment initiation services) as anything other than an attempt by the EC to introduce competition and challenge to the status quo where a relatively small number of card schemes serve the majority of market.

The EC has proposed a regulation on interchange fees applying to card-based transactions. These fees are typically charged by the card-issuing bank to a merchant acquirer when collecting payments for its merchants. The merchant acquirers tend to pass these fees on to merchants, with the result that they are ultimately passed on to merchants’ consumers in the form of increased prices for goods or services.

The EC has found that certain mechanisms in place reduce the opportunity for merchants to steer consumers toward using cards that incur lower fees, resulting in non-competitive prices across the chain…

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