The EU caps fees on Visa and MasterCard

A certain feeling of déjà vue.

With a certain feeling of déjà vue, the European Commission is again gunning for the major card issuers.

The EC has been trying to sort out alleged anti-competitive behaviour by MasterCard and its larger rival Visa since 2007. It is all to do with interchange fees – the charges paid by retailers on card transactions. Merchants argue that card companies unfairly overcharge them; in the other corner, the card companies contend that the fees are justified by the services they offer in return, such as easy payment collection.

The EC seems to be proposing that interchange fees be capped at 0.2 per cent for debit card payments and 0.3 per cent for credit cards. According to the EC, the proposed cap will cut total debit card fees across the EU to around €2.5bn from €4.8bn; credit card fees will fall to €3.5bn from an estimated €5.7bn once the cap is in place.

As consumers, I suspect we will barely notice any difference. MasterCard and Visa Europe have already capped their fees. I would wager – not huge sums but perhaps the loose change in my pocket – that we may expect to hear about the experience in Australia when the regulators capped interchange fees.

There was a well publicized survey in Australia – sponsored by MasterCard by the way – that concluded that once the government regulated interchange fees it was impossible to determine whether merchants passed on price reductions to customers.

I expect that we may also hear of gloomy predictions that a cap on interchange fees will inevitably lead to increased reliance on annual cardholder fees. The argument will be that card issuers, faced with reduced income from one source, will look for other ways to make good that loss. Expect also to hear that loyalty and rewards programmes may become a thing of the past due to the EU’s meddling.

The market barely batted an eyelid at todays news with MasterCard shares inching down by 1 per cent today. The issuers continue to continue to win new customers and expand their range of innovative services and products. For example, MasterCard has introduced mobile apps that are able to reduce expense accounting overheads and improve expense tracking for businesses. Major contract wins include one from the government of Canada that will convert its travel expense programme to MasterCard.

It is also among the biggest financial services sponsors of sports and the arts. If you watch any of the coverage of the Open Golf championship teeing off tomorrow, you will do well to avoid seeing the MasterCard logo as a constant presence on the screen.

Visa and MasterCard are two of the strongest performing financial services firms and are extremely well placed to enjoy further earnings and profits growth. Interchange fees will never be popular with the consumer press. They are however here to stay.

Photograph: Getty Images

Douglas Blakey is the editor of Retail Banker International

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Tim Farron sacks former MP David Ward

The Liberal Democrat leader said Ward's remarks made him "unfit" to stand. 

Liberal Democrat leader Tim Farron has sacked David Ward as a candidate declaring him "unfit to represent the party". 

Ward, who lost his seat in Bradford East in 2015, once said "the Jews" were "within a few years of liberation from the death camps...inflicting atrocities on Palestinians". At the time, the comments caused outcry, and Ward faced disciplinary procedures - later adjourned.

Farron, though, doesn't intend to revisit this particular episode. After news broke that Ward had been re-selected to stand as a candidate, he initially said it was not the leader's job to select candidates, but hours later had intervened to stop it. 

In a short statement, he said: "I believe in a politics that is open, tolerant and united. David Ward is unfit to represent the party and I have sacked him."

Although Ward has been involved in anti-racism organisations, he has courted controversy with his conflation of Jews with Israel, his questioning of Israel's right to exist, and his tweet in the aftermath of the Charlie Hebdo attack, in which French Jews were targeted, that "Je suis #Palestinian".

While the anti-Semitism row threatened to knock the Lib Dem's early election campaign off course, Farron's decision may help him avoid the ongoing saga haunting the rival Labour party. In April, Labour decided not to expel Ken Livingstone for his claim that Adolf Hitler supported Zionism "before he went mad and ended up killing six million Jews".

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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