Apr 13, 2006

EU: Interchange fees could be abolished altogether

A European Commission inquiry into payment cards points to large discrepancies between fees charged in EU member states as evidence of the poor state of competition. It found that the fees retailers pay to credit card companies vary between countries by up to 500 per cent for Visa and by 650 per cent for MasterCard.

Of course, cards all look exactly the same, work the same and perform exactly the same function everywhere, regardless of where they come from or where they're used. So the fee differences are not related to the actual product itself.

The Commission report said the credit card business was so lucrative that interchange fees could be abolished altogether without undermining the companies’ ability to “generate a healthy profit”.

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