"MasterCard Worldwide strongly supports the Commission's drive to improve competitive conditions in Europe and establish a single payments area – in fact the development and cross-Europe roll-out of Maestro, our global debit card brand, is evidence of our commitment to support and deliver these goals.

"However we also believe that, if the Commission's final report is to be a genuine vehicle for positive change within the industry, it must be based on a correct understanding of the cards payments business. From reading the Commission's Interim Report, our concern is that there are still significant misunderstandings about this business and its central role in driving commerce both in Europe and around the world. In short, we believe that the Interim Report is based on incomplete, inaccurate and inconsistent evidence.

"For example, the Commission's perception that the payments card industry is excessively profitable is not supported by reliable data and is inconsistent with its finding that the issuing business is "not concentrated" in most EU countries.

"It is proven that the payments card industry has brought enormous benefits to consumers in the form of safe, reliable and inexpensive payment options, which are accepted at millions of merchant locations and used by hundreds of millions of consumers in Europe. It is our view that the Commission should not undermine these benefits by reaching conclusions that are not supported by sound evidence, or to tamper with business practices - such as interchange fees - that serve around the world to equitably balance costs that otherwise would fall almost entirely on consumers."

The Interim Report states that interchange fees are unnecessary. In response to this, Perez said: "This is not supported by any reliable evidence. It was a similar lack of evidence that recently led the Office of Fair Trading to withdraw its decision against MasterCard's UK interchange fees. It is our belief that there is a fundamental misunderstanding of the way payment systems actually operate. For example, the interchange fee, which is central to the operation of four-party card schemes, balances costs and is a proven and necessary mechanism that has led to plastic payments being one of the most innovative industries in the world. Over forty years, it has driven a system through which more than 24,000 banks have issued one billion cards bearing the MasterCard family of brands, which can be used at more than 24 million merchant locations around the world.

"We understand merchants would prefer to pay less for accepting cards, but this is not the issue. The issue is whether shifting more or even all of the cost of electronic payments from merchants to consumers – as the Interim Report recommends – will produce a more efficient and more competitive payments market. We believe the answer is no. Making the four-party scheme more expensive to consumers will simply lead to more cash and cheque transactions and to greater reliance on store cards and three-party cards. In the long run, even merchants will be less well off too, since these alternatives usually end up being more expensive. Smaller merchants would suffer the most because they tend to have the highest cash handling costs and, unlike their larger competitors, can't offer their own proprietary cards."

Perez also noted that the Interim Report is critical of fragmentation in the European payments business. "It is very disappointing that the European Commission does not acknowledge the very tangible commitment already made by the European banking community to create a single market for payments through implementation of the SEPA Cards Framework. MasterCard fully supports SEPA, which will transform the payments landscape in Europe, and will actually address many of the issues highlighted by the European Commission."

It is expected that the Commission will issue a final report before the end of the year. Commenting on this process, Perez said: "At this stage the Commission has identified a number of issues and asked for comments from interested parties. Over the coming months, the dialogue between the industry and the Commission will continue and we will be an active participant in this process. A Sector Inquiry does not in itself imply any legislative or other changes in the industry. If issues are identified in the final Report, MasterCard will work with the Commission to address these."