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02 February 2007

EU meddling in interchange threatens to derail Sepa project warns MasterCard

MasterCard has warned the European Commission that further interference in the setting of interchange fees runs the risk of derailing the single euro payments area (Sepa) timetable.

While the European Commission has backed down from its threat to abolish interchange entirely, competition commissioner Neelie Kroes has reiterated her determination to stamp down on 'unjustifiably high' charges.

The beligerent language has rattled MasterCard which has retaliated by accusing Kroes of leaving the interchange debate in a 'cloud of uncertainty that could deter further investment in Sepa initiatives'.

The card scheme warns that banks may hesitate to continue to invest in Sepa while the European Commission debates what to do with interchange fees.

'While the European Commission still seems to believe that interchange fees should be reduced significantly, it is overlooking that zero or low interchange fee schemes are often based on price regulation, cross-subsidisation or operating losses,' states MasterCard. 'Most importantly, these schemes do not deliver the competition throughout the value chain that Sepa aims to achieve.'

In releasing the full report to the media on Wednesday, Kroes said she would not specify a correct level for interchange charges.

'As competition commissioner, I will not and cannot go further to specify what would be acceptable levels,' she told a news briefing.

© Graham Bishop

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