Senior figures in the European Commission have hinted that the pace of digital change in payments could prompt an early reassessment of rules on interchange fees.
Defending the controversial review that the European Commission published in June this year, René Plank, deputy head of unit for payments systems at the commission’s department for competition, said that the “conclusions need to be taken in context”, and that they do not pre-empt any future developments for the regulation.
In its review of the regulation, the commission found that interchange fees had declined, with savings having been passed on to merchants and consumers in the form of lower prices. With this, it decided against making any changes to the rules in the immediate future.
When pressed by the audience at the QED Conference on IFR and Competition in Payments on when there would be another review of the regulation, Plank remained agnostic, reminding the conference that there is a review clause required for EU regulation. However, he did offer some insight on what could trigger earlier intervention.
“I would take it a step further that legislation has to fit its purpose in a changing environment,” he said, touching on the importance of new entries and increased digitisation. “This may trigger a need to look into it again, as is the case with any legislation.”
Plank defended the decision not to act further at present and pointed to the review’s conclusion that there has been a tangible benefit for consumers and merchants.
He was joined by market players in saying that the regulation has met its objectives.
Mikael Conny Svensson, Mastercard’s vice president of public policy in Europe, added that a number of forces beyond the Interchange Fee Regulation (IFR) have encouraged competition in the EU payments ecosystem.
“The trend of digitisation is increasing, and it is not only regulation that has encouraged this,” he said.
He said that Europe now has one of the world’s cheapest levels of card acceptance, crediting the IFR as well as increased competition and innovation within the acquirers market.
His praise was echoed by Trisham Chundunsing, EU payments and financial services policy lead at Amazon, who noted that the regulation has delivered the right level of regulation and a reduction in fees but warned that scheme fees are having an impact on the business.
He referenced the recent report by the UK’s Payment Systems Regulator, which found that “average scheme fees more than doubled” between 2014 and 2018, with most of this increase taking place after the IFR came into force.
Chundunsing said that the scheme fees are “something keeping us awake” and are having a negative impact on the corporation’s supply chain.
Plank noted that the commission’s role is not just about carrying out studies, saying that “fact finding” in this area is a continuous process and that scheme fee increases will be looked into.