Brussels, 31st January 2007
The European Commission has published the final report of its competition inquiry into the retail banking sector. The inquiry has found a number of competition concerns in the markets for payment cards, payment systems and retail banking products. Particular indicators are large variations in merchant and interchange fees for payment cards, barriers to entry in the markets for payment systems and credit registers, obstacles to customer mobility and product tying. Some market participants have already offered voluntary reforms following the publication of preliminary findings on payment cards in 2006 (see IP/06/496 and MEMO/06/164). The Commission will use its powers under the competition rules to tackle any serious abuses, working closely with national competition authorities. The outcome of the inquiry should boost retail banking competition in the run-up to the creation of the Single Euro Payment Area (SEPA).
Competition Commissioner Neelie Kroes said: “The inquiry has found widespread competition barriers which unnecessarily raise the cost of retail banking services for European firms and consumers. The Commission will make full use of its powers under competition law to tackle these barriers, in the market for payment cards and elsewhere when they result from anticompetitive behaviour.”
Payment cards and payment systems
The European payment cards industry is large and provides the means for consumer payments with an overall value of €1 350 billion per year. Such payments generate an estimated €25 billion in fees annually for banks from EU firms. The Commission's inquiry found indications of several concerns:
After publication of the interim report on payment cards and systems, the Commission met banks in a number of Member States to discuss where self regulation could address competition concerns. This approach is yielding promising results. Good examples are Austria, Finland and Portugal, where market players have taken initial steps to address the Commission's concerns.
The European banking industry – with the full support of the Commission and the European Central Bank – is working to create a Single Euro Payments Area (SEPA) to improve efficiency and lower the cost of retail payments. The sector inquiry has highlighted several market barriers that should be addressed in the SEPA context.
Retail banking product markets
The EU retail banking industry generates €250-275 billion per year in gross income, equivalent to 2% of EU GDP. Markets are generally fragmented along national lines, divided by factors including competition barriers and regulatory, legal and cultural differences. The sector inquiry found indications of competition problems in several areas:
The sector inquiry opened in June
2005 (see IP/05/719).
Interim reports were published on payment cards in April 2006 (see IP/06/496)
and current accounts and related services in July 2006 (see IP/06/999).
For further information, see also: MEMO/07/40.