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No change for interchange

Red faces at the Polish Competition Authority after the European Commission backed down on threats to outlaw credit card interchange fees on retail transactions. (EC abandons retailers and backs down on interchange fees). 

The Commission – sensibly enough – has decided to stay its hand on interchange in the absence of any obvious alternative fee-charging model for remunerating card scheme operators. Somebody, after all, has to pay the piper. And as the politicos soon realised, the scrapping of multilateral interchange fees (MIF) and the imposition of more transparent charges would not exactly be a vote-winner with consumers at the check-out. Just as importantly, the disruption to business-as-usual would likely have a serious knock-on effect to the Commission’s other cherished legislative project, the push to achieve a single euro payments area by 2010.

So, where does Poland come into the equation? Well, The Polish antitrust office earlier this month decided  to ban the MIF and to impose fines of 160 million Polish zloty (approximately EUR41 million) on the banks participating in the “cartel”. As a result, merchants should only be paying for the costs of processing the payment transaction to their bank.

Perhaps the watchdog should have consulted with the Commission before taking such draconian action. Expect the banks to appeal against the decision – and to win the case.

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Paul Penrose
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Paul Penrose

Head of Research

Finextra

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06 Oct 2006

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London

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EBAday

EBAday is the annual event for European payments professionals organised by Finextra and the Euro Banking Association. This community has been created to deliver a forum for EBA delegates to exchange views on instant payments, open banking and new developments in payments processing and technology.


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