By Chris Jones - 31st January 2007
Claims by the European commission that consumers are paying higher than necessary fees for credit cards and bank accounts have met with a mixed reaction.
Consumer groups and retailers, not surprisingly, welcomed the findings unveiled by competition commissioner Neelie Kroes on Wednesday.
“Today’s report is yet another condemnation of the tricks Visa, Mastercard and the banks behind them play to maximise their income at the expense of Europe’s shoppers,” said Xavier Durieu, secretary-general of EuroCommerce, which represents EU retailers.
“Retailers want to see an end to the excessive €25bn fees paid by them and Europe’s other businesses and their customers to accept payment cards.”
But Durieu added that Kroes needed to go a step further and take direct action against companies found to be distorting the market.
“Anti-trust enforcement action by the European commission and national competition authorities is the only way to do that.”
The commissioner has not yet put forward new proposals for improving competition in card payment systems, preferring to let companies act voluntarily to reduce costs.
Consumer group BEUC said that the findings of the investigation had come as no surprise, especially with regard to the methods used to retain customers’ business.
“Most consumers don’t know how much their bank costs them and how much the same services would cost in a different bank. The quality of service is also difficult to observe and compare,” said BEUC director Jim Murray.
“The facts are clear: banks do not really compete and make excessive profits from consumers. The current abuses must stop.”
He said that BEUC investigations had shown significant barriers to switching bank accounts.
In Italy for example, switching to another bank can take more than two months, while in France it can cost up to €335.
Kroes also said that the regionalisation of banks could be seen as protectionist, with companies agreeing between themselves to limit their activities to a specific geographic region.
But German MEP Alexander Radwan took exception to Kroes’ comments, saying that such regionalisation was widespread in Germany and had been for years, with no discernible disadvantage for consumers.
“The German banking sector is currently one of the most competitive in Europe,” he said.
“The commissioner does not make it clear how the regional structure in germany is detrimental to consumers.”
Meanwhile, Peter Ayliffe, president of Visa Europe, said he welcomed the fact that Kroes was “taking a more measured approach”.
But he reiterated warnings that any attempt to regulate interchange fees would be misguided.
“Without interchange it would be difficult to deliver the single European payments area and it could lead to the end of cards for all, as costs for consumers would increase.”
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