How the Proposed Payments Legislation Will Restrain Competition Among Payment Card Schemes and Harm Consumers in the European Union

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David Evans, Oct 15, 2014

The European Parliament, in early April 2014, endorsed and further extended draft legislation, originally proposed by the European Commission, which will impose sweeping regulation on payment card businesses. The backers of the legislation claim that it will nurture competition, innovation, and consumer choice in the European Union. In fact, if adopted in the current form, it will reduce competition among payment systems in the EU, impede the entry of new schemes, weaken innovation, and decrease consumer choice. European consumers will end up paying billions of euros more in fees. The legislation will squelch virtually all challengers to MasterCard and Visa.

One doesn’t have to speculate about these effects. There are already dead and wounded victims in plain sight. The European Commission’s recent policies have eliminated the most serious emerging pan-European challenger to the global card networks. A group of 24 banks drawn from across major countries in Europe tried to start a competing pan-European card system a few years ago. After being rebuffed by an intransigent Commission, set on shifting the cost of payments from merchants to consumers, the Monnet Project folded in April 2012. Several other attempts are all but shuttered. European consumers have already lost competition, choice, and innovation as a result.


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