News

Europe exchange rate regs may be in the cards

February 1, 2012

Expectations are mounting for near-term regulatory action from the European Commission concerning interchange rates for debit and credit transactions, according to a report at barrons.com.

The report said that comments from Joaquín Almunia, the EU Commissioner responsible for competition, indicate that both Visa Europe and MasterCard activities are likely under review.

Both card networks have informally settled with the European Commission in the past, which has helped prevent EU-wide regulation to date. Visa Europe lowered cross-border and domestic consumer debit-card transactions in nine EU Member States to 20 basis points; MasterCard reduced its rates for debit and credit to 20 basis points and 30 basis points, respectively.

Since Visa Europe is a separate entity from Visa, any regulatory action affecting cross-border rates would have a small impact on Visa. However, the Barrons article said, MasterCard's volume, revenue and earnings exposure to European Credit Interchange regulation would be comparable to that of Visa's exposure to U.S. debit interchange regulation from the Durbin amendment.

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