Global point of sale (PoS) interchange fees increased by 140% between 2000 and 2006, to $64bn according to this new study. The huge growth in fees (that a merchant’s bank pays a customer’s bank when accepting cards using card networks, such as Visa, for purchases) was mainly fuelled by an increase in payment card purchase expenditure worldwide and increased interchange rates in the US, and occurred despite reduced interchange rates in Australia, Europe and elsewhere.
The study analyses the evolving and increasingly complex landscape for PoS interchange fees. It forecasts major changes to PoS interchange fee arrangements and a decline in the levels of interchange fees. The study argues that the future for the fees is uncertain, for five main reasons:
- Competition and other public authority interest in PoS interchange fees is growing.
- Authorities have increasingly tough stances on multilateral interchange fee arrangements.
- The European Commission’s actions and findings have been influencing those of National Competition Authorities.
- Pressure from merchants and retailer associations towards reduced interchange fees (or removal) is increasing.
- Political and regulatory pressure to converge and standardise fees in the SEPA area.
CELENT REPORTSEPA: BANKS ARE BUILDING IT, BUT WILL CORPORATE CUSTOMERS COME?
The Single Euro Payments Area (SEPA) initiative is live but complaints and concerns prevail about its progress. This new report identifies that:
- Corporations will refrain from taking any step beyond the minimal requirements for SEPA compliance until a clear business case is established and legal harmonisation of payment regulations is reached.
- There is no mandated pricing for SEPA. Celent expects that, between 2008 and 2012, there will be a tug of war between banks and corporations about pricing of SEPA payments.
- One of the show-stoppers to full SEPA implementation is the lack of a clear deadline. There is also general acceptance that its success depends on uptake by multinational corporations and public sector organisations.
- Banks are quite silent about SEPA, and the lack of adequate incentives to shift to SEPA-related products underlines their inability (if not calculated indifference) to promote it.
- To be among the top players in the new SEPA environment, a bank must process at least five billion payment transactions a year. Banks need to demonstrate what additional services and benefits they can offer their corporate customers to convince them to migrate to the new SEPA instruments.
