Neelie Kroes has insisted new EU rules do not provide an excuse for
banks to move from national debit schemes to more expensive
international schemes. Kroes said such a move would undermine the
fundamental aims of the Single European Payments Area, which is due
to come into effect on 1 January 2008.
Speaking at the European Parliament on 4 December, Kroes said:
“Such a SEPA for cards would mean less competition, not more – with
all the negative knock-on effects that can be expected from such a
development. And this is not something I am willing to let
happen.”
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The comments will be seen as a call to arms for banks to come up
with initiatives and agreements to expand existing national debit
schemes across Europe, which could rival schemes from Visa and
MasterCard.
The commissioner said that where banks had opted to scrap national
schemes and move to the international ones run by Visa and
MasterCard, as had happened in Austria and the UK, retailers had
ended up paying more. The price was then passed on to consumers.
That process defeats the object of SEPA, which is to deliver better
quality payment products at better prices for European citizens,
according to Kroes.
Attractions of international schemes
Kroes admitted banks were uncertain about what made them compliant
under the SEPA Cards Framework, which meant they found
international schemes more attractive, because they offered a
simple solution to meet the rules. Banks are also being attracted
by multilateral interchange fees – fees charged to retailers for
accepting card payments – available from the international
schemes.
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By GlobalDataKroes said: “The commission and the European Central Bank feel
there is no need that the key element of SEPA compliance should be
the coverage of all 31 SEPA states. Why shouldn’t banks decide for
themselves whether joining one or another card scheme represents a
good business case to them? In other words, why shouldn’t market
forces decide which SEPA states and how many of the SEPA states
should actually be covered by a particular scheme? This obviously
means that there is no need for national systems to be replaced by
the existent international schemes.”
The statement comes just one month after a group of influential
retailers including Tesco, WalMart/Asda, Ikea and Carrefour wrote
an open letter raising their concerns on the issue. The letter said
MasterCard’s Maestro and Visa’s V PAY schemes – which are the
alternatives to national debit schemes – were more expensive and
“flawed”.
But Alisdair Gray, European director for trade association the
British Retail Consortium, who helped put together the letter, said
it was aimed at more senior figures in the European Commission than
Kroes, such as EC president José Manuel Barroso, who might not know
the details of the case and doubted whether Kroes had been
swayed.
He said it was used to raise awareness of the separate issue of the
EC’s impending ruling regarding the interchange fees levied by
MasterCard.
Gray told CI: “I don’t know if the letter changed anything for
Neelie Kroes. “I think the decision on MasterCard has been taken,
but they are just tying up legal details. I think she [Kroes] has
always been hostile to the profits of Visa and MasterCard.”
In her speech, Kroes said the commission was working hard to
conclude the ruling. The decision, which has been anticipated for
months, is expected imminently. The last chance for the EC to make
a ruling is on 19 December, when the last College of Commissioners
meeting in 2007 is scheduled.
If there is no ruling by then, the decision will be put back until
the second half of January 2008 at the earliest. That would be a
big embarrassment to the Commission, as it is after SEPA is
officially launched on 1 January. MasterCard said it was in the
dark about the timing of the ruling, but told CI it had plans in
place for when the ruling is made.
Kroes also pledged to address the way the current SEPA Cards
Framework is applied to non-bank payment schemes. She said: “As it
is currently drafted, the SEPA Cards Framework seems to deny access
to non-bank payment schemes. But access by new players is crucial
to promote competition in the payments market. This needs to be
addressed.”
MasterCard and Visa Europe, as well as retailers, have urged the
commission to speed up the decision-making process, stating that
delays were making it difficult for banks and other players to make
business decisions.
Xavier Durieu, secretary general of European trading association
Eurocommerce, told CI: “On all sides we wish for a decision. Each
day which is lost costs money.”
