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European regulators on Thursday offered tepid support for the use of multilateral interchange rates related to pan-European direct-debit transactions, a stance that seems to contradict their earlier position on the use of interchange by MasterCard Worldwide and Visa Europe for cross-border card transactions. Late last year, the European Commission ruled MasterCard's cross-border interchange rates violate antitrust rules as the continent moves toward the Single Euro Payments Area. MasterCard has appealed the ruling and suspended its use of the multilateral interchange rates. Visa's five-year antitrust exemption for interchange expired at the end of 2007. The commission continues to investigate Visa's use of interchange and some of its other European card practices. SEPA, designed to create what many believe will serve as a common market for cross-border payments, officially started earlier this year with credit transfers. The scheme also includes a push toward direct debits and debit and credit card transactions. On Thursday, the European Commission released a statement that said the commission, along with the European Central Bank, "would be prepared to support the idea of a multilateral interchange fee for cross-border direct debits within the framework of the SEPA scheme on condition that such fees were objectively justified and transitional," or applicable only for a limited time. Neelie Kroes, the European competition commissioner, went on to say in the statement that "it may prove necessary to have a multilateral interchange fee for cross-border SEPA direct debits in the very initial stage." SEPA direct debits are scheduled to begin by November 2009, the commission says. Despite appearances to the contrary, the commission's stance will not affect the multilateral interchange rates Visa and MasterCard impose in Europe, Jonathan Todd, a spokesperson for the European Competition Commission, tells CardLine Global. "There are important differences in the analysis of multilateral interchange-fee arrangements in mature payment card systems such as MasterCard's and Visa's and the SEPA Direct Debit system," he says. Those differences include "different product characteristics" between payment cards and direct debits, and the transformation of 31 different national direct-debit systems–including some with the multilateral interchange rates–into one "comprehensive" SEPA-compliant system, he adds. Spokespeople for Visa Europe did not respond Thursday to a CardLine Global request for comment. A MasterCard spokesperson had little to say about the commission's stance or about the card company's appeal. "The company is continuing to meet with the European Commission to discuss interchange but will not speculate publicly about such discussions, as we consider them to be confidential," the MasterCard spokesperson says.
