In a recent statement, EuroCommerce – the European retailers’ association – has welcomed the EU’s retail payments strategy (RPS) and plans for European banks to collaborate in a European Payments Initiative (EPI).
EuroCommerce Director-General Christian Verschueren said: “The COVID pandemic has accelerated existing trends to online transactions. At the moment, this inevitably means more use of credit and debit cards. Retailers and other merchants already pay a lot for accepting cards, and even more if a transaction is online.
We are seeing, despite very welcome action on some card fees under EU legislation, other unregulated fees rising as much as 150% over the last 18 months. This has cost merchants, already struggling due to COVID, nearly €1 billion extra, and this looks likely to continue.”
EuroCommerce also welcomed the drive to improve competition using instant payment technology such as SCTInst and mobile payments. However, EuroCommerce also called on the EC to widen the scope of its Interchange Fee Regulation (IFR) and deal with the ongoing rise in unregulated fees, arguing that “recent evidence suggests that these (and other fee increases) may cancel out much of the benefit of regulation.”
Finally, EuroCommerce suggested that the EC’s current position on interchange has “further strengthen[ed] the two US card schemes, whose market power has been a contributory factor in the failure of at least four earlier EU initiatives … regulation may be the only way to allow new competitors to grow.”
For its part, the European Card Payments Association (ECPA)’s position paper calls on the EU to ensure the delivery of innovative new schemes, including instant payments linked to cards, as well as further enhancing the interoperability of national payment schemes across Europe through the implementation of PSD2 and its provisions for Open Banking.
In making its arguments, the ECPA noted that using cards as the basis for instant payments would not require new rules and procedures. Furthermore, the ECPA said that the EC should do more to ensure that tech giants like Google, Amazon, Facebook and Apple (“GAFA”) operate fairly and on a level playing field with more traditional players, noting that, “a clear balance should be sought between a functioning market, regulation and those incentives which allow European companies to compete with their international counterparts.”
PCM View: The battle gets hotter
The ECPA is arguing for an enhanced status quo and more innovation – including protection for existing players against “Big Tech” solutions. Meanwhile, EuroCommerce is laying the blame for past failed European initiatives squarely at the feet of US giants Visa and Mastercard, and calling for the EC to take more action in support of merchant profitability.
Whatever the merits of these arguments, we are in the middle of a revolution, and the shift to fully digital payments – supported by card or otherwise – is inevitable. That means more attention should be paid to GAFA and its threats, to say nothing of the rising forces represented by WeChat and AliPay.
Neither of the Chinese giants are mentioned by either organisation in their responses – despite the fact that their acceptance locations in Europe doubled last year. Europe’s banks, merchants and PSPs must do more, and more quickly, to get up to speed with the digital revolution – or risk falling behind.