Apr 12, 2006

EU: Credit, debit cards charging too much - "Paradise is over"

An article today in Business Week:

"Credit and debit cards such as Visa and MasterCard are racking up 'abnormal' and 'excessive' profits for banks," EU antitrust chief Neelie Kroes said Wednesday. "Paradise is over," she warned, telling the card industry to make changes or face antitrust investigations that could force them to reform their business or pay fines. "The more the payment card industry does on its own initiative, the less they are likely to face action under antitrust rules," she said.

The global payments system has to become much more merchant friendly very quickly, if banks want to avoid losing interchange revenue. I'll say it again: this is a much bigger problem than fraud, and EMV can help address both problems at the same time, reduce fraud and make payment card acceptance more merchant friendly.

The problem is that the majority of the industry's EMV efforts are concentrated on fighting fraud, with very little if any energy going into re-inventing payment cards to make them much more attractive to merchants.

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