PaymentsJournal’s Post

We are consulting on the potential to reduce hundreds of millions of dollars a year in costs to New Zealanders using the Mastercard and Visa payment networks – affecting nearly all consumers and businesses. Consumers spend approximately $95 billion using Mastercard and Visa each year in New Zealand which costs businesses – and ultimately consumers through higher retail prices and surcharges – around $1 billion annually. “We think this cost is too high, especially when compared to our international peers, and see potential to reduce the fees paid by businesses by more than $250 million per annum,” says Commission Chair, John Small. “Reducing and simplifying these fees could reduce surcharges or even remove the need for surcharging altogether in some cases. This would also make it easier for consumers, the Commission and industry to identify where surcharges are excessive. Surcharges should only reflect the costs of accepting these card payments and we are exploring changes to fees which could see surcharges reduced to 0.7% or less.” The Commission is seeking views on the issues covered in the paper which affect nearly all businesses – large and small – and consumers, to inform its next steps by 4pm on 20 August 2024. The paper can be found here: https://ow.ly/G9KT50SHLSO. Feedback can be provided via this form which is tailored to consumers and merchants: https://ow.ly/CQj850SHLuM.

📣 “Other than a political shift… nothing else of substance appears to have changed” 📌 For me, this was the key line in the Payment Service Regulator’s (PSR) interim report on cross border interchange fees charged in the UK. Effectively, the PSR has found what we in the merchant space have been saying all along - the decision made by Visa and Mastercard to increase these fees post-Brexit was completely unjustified. In fact they go even further and suggest that the only parties in the ecosystem who benefited were issuers (thanks to the increased revenue) and Visa/Mastercard by proxy, leaving everyone else worse off, with the UK merchant community as a whole facing an additional £150-£200 million in costs per year. 📌 There will, I’m sure, be better and fuller breakdowns of the potential impact of the report made by others on this platform, so I won’t attempt a forensic analysis here, other than to say that it’s fantastic to have such a well written report from the PSR, which takes no prisoners in its deconstruction of certain interchange-related myths, and (assuming that the 0.2%/0.3% caps are indeed re-imposed) really serves to demonstrate their values. 📌 And as an aside, I do hope that any caps (temporary or long lasting) are imposed in law rather than as a “temporary commitment” or similar that can be slowly slid upwards at an indefinite point in the future. I will be keeping a keen eye out for the final report, due in Q1! https://lnkd.in/gMamdXAc

Hear, hear "Britain seeks to rein in Mastercard and Visa fees on retailers: Attempts in Europe to create home-grown rivals have floundered as banks balk at the investment cost. A report commissioned by Britain's government last year said the UK needs a "digital alternative" to the two U.S. payment processing networks. […] Cards are the most popular form of payment in Britain, with 27.1 billion transactions in 2022 worth 954 billion pounds. The PSR's 158-page interim report estimates that the fee increases have added more than 250 million pounds ($317.78 million) annually to costs for UK businesses." (Reuters: https://lnkd.in/evavbXYU)

Interchange fees have been the subject of competition cases since before I was at university. There is no sign of that stopping. The Payment Systems Regulator has today published its interim report on cross-border interchange fees in the UK. These are the fees that apply to online purchases made by EEA consumers at UK businesses and vice versa. Mastercard and Visa both increased their fees fivefold immediately after Brexit when the EU's Interchange Fee Regulation 2015 stopped applying. Large overnight price rises always seemed likely to invite regulatory attention. The PSR is proposing an initial price cap of 0.2% for UK-EEA consumer debit transactions and 0.3% for consumer credit transactions (where the transactions are made online at UK businesses). In other words, this would reinstate the caps that applied pre-Brexit. The PSR would then put in place a lasting cap on these interchange fees in the future, once further analysis has been carried out to establish an appropriate level (economists should sharpen their pencils!). Regulators hate to set price caps. They distort competition and sometimes even raise prices. When Stansted Airport was (wisely) released from price regulation, its per-passenger prices charged to airlines actually dropped considerably, and one wonders who benefits most from the price regulation of ITV1 airtime that has now been in place for 20 years. But, there can be a role for price caps in competition policy when all else fails. The consultation is open until the end of January. #mastercard #visa #psr #payments #interchange https://lnkd.in/euRcMryg

Visa, Mastercard to extend non-EU card fee caps to 2029, EU says Visa and Mastercard will extend caps on tourist card fees agreed five years ago with EU antitrust regulators by another five years to 2029, the European Commission said on Friday. Visa, the world's largest payments network operator, and its closest rival Mastercard, in 2019 agreed to a 0.2% fee cap on non-EU debit card payments carried out in shops and a 0.3% fee limit on credit card payments to settle an EU antitrust investigation and avoid hefty fines. The fee caps are due to end in November this year. The move followed a long-running investigation by the EU competition enforcer triggered by a 1997 complaint by business lobby EuroCommerce. The Commission, which acts as the EU antitrust watchdog, said the two companies volunteered to continue the fee caps beyond 2024. "Inter-regional interchange fees for debit and credit card transactions under these schemes will remain capped for another 5 years until November 2029," it said in a statement. "For card present (offline) transactions, the fees will remain capped at 0.2% for debit cards and 0.3% for credit cards. For card not present (online) transactions, the caps will remain 1.15% for debit cards and 1.5% for credit cards," it said. Visa said the extended fee caps provide market certainty on inter-regional interchange rates. "The Commitments agreed with the EC in 2019, and this new Undertaking, recognise that cross border, e-commerce transactions are fundamentally different to in-store payments," the company said in an email. Visa and Mastercard set and charge interchange fees, also known as swipe fees, to merchants which accept their debit and credit cards. The charges generate profits for bank and other card issuers. The EU enforcer however warned that it would start an investigation if it finds concrete evidence showing that the current caps would not be appropriate anymore. #fintech #payments #collections #paytech #fees #cards #commerce

ComCom sees potential for over $250m reduction in payment fees for New Zealanders The Commerce Commission is consulting on the potential to reduce hundreds of millions of dollars a year in costs to New Zealanders using the Mastercard and Visa payment networks – affecting nearly all consumers and businesses. This is part of the Commission’s responsibility to promote competition and efficiency within the retail payment system – the most used financial service in Aotearoa New Zealand. Commission Chair, John Small, says consumers spend approximately $95 billion using Mastercard and Visa each year in New Zealand which costs businesses – and ultimately consumers through higher retail prices and surcharges – around $1 billion annually..... https://bit.ly/46j09VV #NewZealand #Business #Payments Via comcom.govt.au

A significant challenge in the development of advanced payment products is consumer hesitation to incur additional costs for these services. While there is widespread enthusiasm for innovative payment technologies, there remains skepticism regarding the willingness to pay for these enhancements. Consumers are accustomed to low-cost or free payment options and often undervalue the benefits of new technologies. This reluctance is a hurdle for fintech companies striving to introduce advanced features like enhanced security protocols, real-time processing, and seamless international transactions.Balancing innovation with consumer affordability is key to driving the adoption of new payment technologies. Through education and thoughtful pricing models, we can encourage consumers to embrace and appreciate the benefits of cutting-edge payment solutions. #Fintech #PaymentInnovation #ConsumerEducation #AdvancedPayments #SecureTransactions

Cashflows, the platform that makes it easy for merchants to accept payments, today announces an extension to its Visa partnership with Cybersource to amplify authorisation rates, support merchant and partner payouts, and enable international payment acceptance.  Read more: https://lnkd.in/d2ErzNXt #ecommerce #paymentsolutions #partnership #FinancialIT