The European Commission has threatened the payment card industry with antitrust action amid concerns that banks and national card networks conspire to thwart competition by raising barriers to new entrants.
The EC says its sector inquiry into the payment cards industry shows several barriers to entry into the European markets, including technical obstacles and practices by banks and networks that may raise costs for new entrants.
Despite the existence of internationally accepted payment cards, the EC says barriers to entry mean that much of the industry operates on a purely national basis with 25 separate markets in the EU.
The report, which is based on responses from market participants, found that divergent technical standards across the EU prevent many service providers from operating efficiently on a pan-European scale. The lack of multilateral clearing houses in some markets may make entry more expensive.
The EC says some payment systems also exclude non-banks from the cards business and sometimes charge high joining fees to new entrants. Agreements among local banks may also raise costs for new entrants in some instances.
The report found that credit card charges vary dramatically from country to country. In some EU countries consumers MasterCard and Visa interchange fees are 100% higher than in others. Fees for businesses vary by up to 500% across the EU for Visa and up to 650% for MasterCard.
The commision is now launching a consultation and says if the preliminary report findings are borne out by the consultation it will consider action under EC Treaty antitrust rules in individual cases. The inquiry will also be used to determine whether amendments to the regulatory framework for the payment card industry are necessary.
Competition Commissioner Neelie Kroes says: "The payment cards industry in Europe remains national and some local players are preventing competition from developing. This pushes up payment card costs for consumers and businesses. Competition law and sector regulation must work together to create a better environment for business."
The EC says making all forms of cross-border payments (including payment cards) as easy and affordable as domestic payments could save the EU economy between EUR50 and EUR100 billion per year.
Interested parties have until 21 June to comment on the preliminary findings.
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