CB Schemes: Decreasing Interchanges
- After the very last concessions on the part of Cartes Bancaires, the French Competition Authority has published its decision on the main “CB” interchange fees. These fees have been remaining the same since the 1990s but they will decrease starting 1st October 2011:
- 36% for CIP (MIF for card purchases), lowered from 0.47% to 0.30% on average,
- 21% for CIR (MIF for card withdrawal), from 0.72 to 0.57 euro per ATM cash withdrawal.
- The Authority deems that the revenue of the interchange for French banks will decrease from about 2 billion euros to 1.4 billion per year.
- On the same day, in reaction to Mallié parliamentary commission recommendations on merchant commissions, the FBF announced two direct measures on the acceptance commission (paid by retailers). By mid-2012, a preferential “CB” acceptor commission rate will be implemented in each bank’s commercial acquiring offer and will be applied in two cases:
- Merchants with low card activity (less than 12,000 euros turnover),
- Purchase amounts below 15 euros, a preferential MSC rate, based on a 45% lower interchange (CIP) than today’s level (before the Authority’s decision).
- Also, the acquirers commit to provide a detailed monthly statement to report on the total merchant card fees. Already partially in force since 2011, its content and format will have to comply with the standard (RAFEC) by mid-2012.
- Disturbed by last summer’s record fine on the former cheque interchange, French banks retained the principle of the interchange through accepting to compromise over its amount. By 2015, when “CB” interchanges authorisation will expire, they will also have to publish an objective and transparent update methodology, as is the case in the UK.
- Tariff commitments based on the given store’s volumes, suggested in the Mallié report, are all new.
- Considering regulatory and competitive pressure, French acquirers could be driven to refine their commerce segmentation according to their card use (volumes, average chart, card brands). With time, France would benefit from the most accurate card marketing innovation.
- Meanwhile, MasterCard International is still involved in litigation with the EU Commission before the Court of Justice of the European Union. However, a more favourable outcome for payment card issuers is not yet in view.
See June 2011 Observatory