Consumers and businesses alike use the financial services provided by the banking and payment sectors. The Commission applies the EU competition rules fully to these sectors. The banking sector includes retail banking (for individual consumers), wholesale banking (for financial institutions) and corporate banking (services to companies). The Commission has carried out a sector inquiry into retail banking.
The payment sector includes a wide range of services, such as inter-bank payment systems, corporate and retail payments, and payment cards. Competitors commonly participate in co-operative arrangements in this sector, and these could give rise to competition concerns. The Commission, and competition and regulatory authorities all over the world, actively investigate anti-competitive practices in the payment sector and in payment cards in particular.
The Directorates-General for Competition and Financial Stability, Financial Services and Capital Markets Union (DG FISMA) co-operate in this field to ensure that EU financial regulation is pro-competitive from the outset.
The Commission has conducted antitrust investigations in the payment card market, targeting in particular Multilateral Interchange Fees (MIFs). These are fees charged by a cardholder's bank (the 'issuing bank') to a merchant's bank (the 'acquiring bank') for each sales transaction made at a merchant outlet with a payment card. In payment schemes such as Visa and MasterCard, which are associations of banks, these fees are multilaterally agreed by member banks.
When a customer uses a payment card to buy from a merchant, the acquiring bank pays the merchant the sales price less a 'merchant service charge', the fee a merchant must pay to his bank for accepting the card as a means of payment. A large part of the merchant service charge is determined by the interchange fee. Merchants pass on their costs for accepting card payments to their customers by raising retail prices.
The MIF appears to be a decision of an association of undertakings that may have the object and the effect of restricting competition between acquiring banks. The MIF is an important part of the total cost for card acceptance and ultimately contributes to the prices of goods and services for final consumers. As demonstrated by the existence of payment schemes that function without a MIF, multilateral interchange fees are not indispensable for the viability of payment cards.
Even though MIFs appear – at least in the cases investigated by the Commission so far – to constitute a restriction of competition within the meaning of Article 101(1) of the Treaty on the Functioning of the European Union (TFEU), they may be eligible for an exemption under Article 101(3) of the Treaty if it can be shown that they have positive overall effects on innovation and efficiency and allow a fair share of these benefits to be passed on to consumers.
To evaluate the impact of Regulation 2015/751 on Interchange Fees, the European Commission submitted on 29 June 2020 a Commission Staff Working Document on its application to the European Parliament and to the Council. The report concludes that the Regulation has achieved its major objectives. Interchange fees for consumer cards have decreased, which has led to reduced merchants’ charges for card payments, resulting in improved services to consumers and lower consumer prices. Market integration has improved through the increased use by merchants of cross-border acquiring services and more cross-border card transactions. However, further monitoring and reinforced data gathering are necessary in some areas, including those where only limited time has elapsed since the Regulation entered into force.
In order to prepare this report, the Directorate General for Competition contracted with Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft (EY) a support study on the functioning and application of the Interchange Fee Regulation. To allow for a comprehensive examination of effects, the contractor will collect information through an online survey, in particular on transaction volumes, fees & charges, cost, and other relevant information related to card-based payments.
On 7 December 2020, DG Competition organized a public hearing (in virtual format) on “The Interchange Fees Regulation in a rapidly evolving payment landscape: Impact and way forward”. The hearing was designed to provide input to the Commission's ongoing reflection process about the impact of the Interchange Fees Regulation (IFR) and how it can continue to serve European consumers and merchants while contributing to the further completion of the Internal Market in a fast-changing retail payments sector.
The programme for the Hearing is available here.
The list of speakers is available here.
The full record of the Hearing is available here.
The results of the Slido polls conducted during the Hearing are available here .
Please send your additional feedback or comments at COMP-D1-HEARING-IFR@ec.europa.eu.