Brussels, 12th April 2006
Businesses and consumers do not yet benefit from a fully competitive Internal Market in payment cards according to a preliminary report published by the European Commission on its sector inquiry into the payment cards industry (see IP/05/719 and MEMO/05/204). The report, based on responses from many market participants, reveals several potential barriers to entry into payment card markets, such as technical obstacles and practices by banks and networks that may raise costs for entrants. The industry, consumers and other interested parties have ten weeks (until 21 June) to submit their views and comments on the preliminary findings. If the preliminary findings on payment cards are borne out by this consultation, the Commission will consider action under EC Treaty antitrust rules in individual cases. In addition, the results of the sector inquiry will feed into the Commission’s analysis of whether amendments to the regulatory framework for payment cards are necessary. The Commission will publish in July a report on the second part of its retail banking inquiry - focusing on current accounts and financing of small firms.
Competition Commissioner Neelie Kroes said: “The payment cards industry in Europe remains national and some local players are preventing competition from developing. This pushes up payment card costs for consumers and businesses. Competition law and sector regulation must work together to create a better environment for business.”
The European payment cards industry is large and provides the means for a significant part of consumer payments in Europe. A total of 23 billion card payments are made annually in the EU with an overall value of € 1,350 billion.
Despite the existence of internationally accepted payment cards, historic reasons and barriers to entry mean that much of the industry operates on a purely national basis with 25 separate markets in the EU. A more integrated and competitive payment card industry could create significant efficiencies for businesses, boost competitiveness and innovation and raise consumer welfare by delivering better services at lower prices. Making all forms of cross-border payments (including payment cards) as easy and affordable as domestic payments could save the EU economy between €50 and €100billion per year
Indications that markets are not yet competitive:
Potential barriers to competition found:
The inquiry has found evidence of a number of barriers to competition. Examples are:
The Commission’s goal of establishing a Single Market in payments and a Single Euro Payments Area (SEPA) are both important if European businesses and consumers are to benefit from these efficiencies. The findings of the sector inquiry will contribute to achieving these two objectives.
The interim report and further information are available on the internet:
A final report will be published by the end of 2006. The Commission will explore possible remedies to problems identified with national competition authorities, regulators and industry participants.
For further information, see also MEMO/06/164.