In a move that seems to parallel U.S. policies, a consortium of top French banks has agreed to cut debit card interchange rates inside the nation's borders by as much as 36% in response to a price-fixing investigation by a government agency.
France's Competition Authority on July 7 said Groupement de Cartes Bancaires CB, an association of French banks accounting for about two-thirds of all of France's card transactions, on Oct. 1 will adopt its new debit card interchange rates.
Complaints from merchants and from two French retail trade associations in 2009 and 2010 reportedly prompted the investigation of French banks' debit card rates to determine their fairness. Some of the group's interchange rates had been unchanged for more than two decades, the authority said.
The affected group comprises 130 banks, including giants BNP Paribas SA, Credit Agricole SA and Societe Generale SA.
The competition authority said in an April 5 press release that while it is not illegal for the bank group to set interchange rates within its network, the rates must be based on realistic costs for supporting security and interoperability.
The group initially proposed cutting debit card interchange rates by 25%, but the competition authority urged deeper cuts following a comment period that ended May 5.
In adopting the new rates, the bank group also agreed to maintain transparency of its rates and to adjust debit costs based on security needs and evolving technologies.
The similarity between France's push to justify fair costs for debit interchange and the U.S. Federal Reserve Board's recently issued final debit interchange rules is intriguing, but the two developments are not necessarily related, Zilvinas Bareisis, a senior analyst at Celent, says.
"Ultimately France's banks reacted to pressure from antitrust forces, which underlies the new U.S. debit rules, but the two countries' payment card markets are very different," Bareisis says.
In France some 80% of card transactions are linked to bank accounts, with less reliance on credit cards, Bareisis says.
France also boasts far fewer banks compared with the U.S.
"Each market is different in its habits and policies and how they use debit cards, and France's new rule probably serves as an update as payment trends continue to change," he says.