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Some banks could balk at supporting European-centered card schemes that one day might compete with MasterCard Worldwide and Visa Europe, Terry Xie, director of the international advisory service at United States-based consultancy Mercator Advisory Group Inc., tells CardLine Global. The fledging schemes, including Monnet and Payfair, want to take advantage of Europe's move toward a common market for electronic payments and of pressure from regulators over what they consider monopolistic practices and high costs associated with the two major international brands. However, European banks will consider the revenue they might lose from supporting a lower-cost card brand, Xie says. "Banks like interchange," he says. The level of interchange allowed for cross-border transactions in Europe depends largely on the outcome of cases regulators have taken against MasterCard and Visa. Though big German and French banks, including Deutsche Bank AG and Société Générale, seem solidly behind the Monnet scheme, some observers have questioned whether financial institutions hammered by the global recession will invest in new payments infrastructure and whether new card brands can compete with the giants. For their part, Visa and MasterCard hardly appear worried. "MasterCard feels confident to be well positioned," a Europe-based spokesperson for the card company said this week. Noting that "Visa Europe member banks have made significant investments in Visa Europe's payment system in recent years," a spokesperson for the card organization says "we are aware of a number of proposed new schemes in Europe, but we have yet to see any evidence of their entry into the market. To create new payment schemes would require significant investments in a very tough economic climate."
