Global Regulatory Trends: Interchange Regulation
New research from Mercator Advisory Group examines the international state of interchange regulation
Boston, MA – November 20, 2013
– Around the world, legislators and regulators are taking aim at interchange fees and trying to reduce or cap the amount of fees financial institutions and the global card networks can charge merchants for accepting payment card transactions.
Despite scant evidence from countries that were among the first to introduce interchange regulation that regulation achieves its intended purpose, namely increased savings to both consumers and merchants, regulatory authorities are imposing or proposing to impose debit and credit interchange rate caps and interchange revenue streams globally are under threat.
Though the full effects of interchange regulation are not felt for years after, based on empirical evidence from Spain and Australia among other countries, the cap the European Commission proposed in July 2013 will have a considerable impact on all participating countries across the region set the domestic industry back a number of years as happened following domestic regulation in Spain and Australia.
“From creating standards around data privacy to classifying new payment players, European authorities have demonstrated in the past a strong desire and willingness to introduce broad reaching payments regulation. While interchange regulation in Europe prior to 2013 was largely done at the domestic level, new proposals point to a pan European approach to interchange fee regulation (however not exclusively),” comments Tristan Hugo-Webb, Associate Director for the International Advisory Service at Mercator Advisory Group and the primary author of the report.Highlights of the report include:
Global and Europe-specific payment card usage trends
A summary history of interchange regulation around the world
An in-depth examination of the European Commission’s 2013 proposals to cap debit and credit card transactions across Europe
A review of evidence from Spain and Australia, early adopters of interchange regulation, on the effects of regulation on the local payments industry One of the 10 exhibits included in this 23-page report:Companies mentioned in this report include:
MasterCard, Visa, American Express, Diner’s Club, Groupement des Cartes Bancaires.
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Mercator Advisory Group is the leading independent research and advisory services firm exclusively focused on the payments and banking industries. We deliver pragmatic and timely research and advice designed to help our clients uncover the most lucrative opportunities to maximize revenue growth and contain costs. Our clients range from the world's largest payment issuers, acquirers, processors, merchants, and associations to leading technology providers and investors. Mercator Advisory Group is also the publisher of the online payments and banking news and information portal PaymentsJournal.com.