While the banks, united in the European Payment Council, work hard to achieve a single Euro Payment Area for basic payment instruments (including cards), the Commission has decided that it no longer wants to wait. This week, they announced the launch of inquiries into competition in financial services. More specifically, the cards market has their attention.
So where does this leave the European banks? What can be expected to happen as a result of these enquiries? Peter Jones provides an interesting analysis.
He also estimates what would happen if Europe were to apply a common multi-lateral interchange fee for cards-payment. France, Spain, Italy and Portugal would stand to lose considerable sums of money, while the Netherlands and Belgium would reach a more profitable situation.
Imagine that the Commission would provide guidelines or orders which boil down to the application of a low uniform MIF. That would be a considerable intervention and most likely a boost for further dissemination of cross-border card schemes. And eventually, such a ruling might make the current work of European banks and the European Payment Council redundant.
As a matter of fact: why would these banks even consider further walking the road of self-regulation if a could of sheer intervention is hanging above the market? A wait-and-see approach might be better than the continued struggle to achieve consensus on card frameworks and what have you....
