Interchange fees

The most enlightened regulator or legislator can’t match the dynamic intelligence of billions of market decisions by consumers, merchants, banks, networks and processors, argues Eric Grover, a principal at Intrepid Ventures.

Visa Inc. and Mastercard Inc. ended nearly two decades of European Union antitrust scrutiny with a pact that requires them to reduce fees for foreigners shopping in the region.

So far, 2019 has been characterized by a series of eye-catching strategic deals within the global payments ecosystem, with new players positioning themselves to rival Visa and Mastercard. The card networks giants have responded by pursuing a strategy to become less reliant on transactional fees.

Two months after Mastercard lawyers urged an English appeals court to follow the lead of antitrust judges that had tossed out a multi-billion pound class action lawsuit from U.K. consumers over credit card charges, that appeals court has ruled against the credit card giant.

Blockchain technology provider Yosemite X is following the spirit of the mega-retailers' disbanded Merchant Customer Exchange (MCX) joint retailer venture, but on a local level.

After forming a series of high-profile partnerships with various payments service providers, China's UnionPay International has declared its plan to challenge Visa and Mastercard’s duopoly of the U.K. card industry.

The move by Kroger Co. comes in response to rising interchange fees on Visa's premium credit cards. The cards will be banned at 142 Smith's stores in the western U.S.

Visa and Mastercard plan to raise interchange while battles over those rates and other levies such as merchant surcharging rage on, setting the stage for extra merchant expense, consumer costs and even more squabbling.

Given the competitive nature of the current marketplace and the low probability that interchange rates will actually go up, issuers and processors need to continually evaluate their infrastructure, writes Steve Gilde, director of global product marketing for Paragon Application Systems.

The European Commission has fined Mastercard 570 million Euros, or about $648 million, over card network rules that prevented merchants from shopping for better terms at other banks in the EU.