The FINANCIAL -- Ahead of a European Parliament plenary vote on 3 April 2014, MasterCard calls on Members of the European Parliament not to include commercial cards in draft legislation on interchange fees for electronic payments, according to MasterCard.
Commercial cards were not considered in the original European Commission proposal because of the very different role they play to consumer cards and have not been subject to any impact assessment.
Unlike consumer cards, commercial cards are generally used to replace manual invoices and cheques. They facilitate quick and secure transactions between businesses and merchants – compared with invoices that can take up to 90 days to process and often never get paid at all. Commercial cards not only guarantee quick and seamless payments to merchants, they also provide more sophisticated accounting services to businesses while helping them cut down on paperwork.
“Treating commercial cards in the same way as consumer cards is like treating a family car in the same way as a commercial truck. Commercial cards were not included in the original proposals for good reasons. They differ significantly from consumer cards in purpose and usage, and bring huge benefits to small businesses. Copy-pasting proposals designed for consumer cards would drive the cost of commercial cards up substantially and make them too expensive for many small businesses,” said Andrew Buckley, Head of MasterCard Commercial Products Europe.
If interchange fees for commercial cards were capped at 0.3%, issuing banks would be forced to raise their cardholder fees for commercial cards significantly. A recent survey suggests that around 50% of small businesses in France, Germany, Italy and the UK would not be willing to pay an extra €10 per month for their card, according to MasterCard.
“One of the biggest benefits of commercial cards is the immediacy and guarantee of payment. If they become too expensive, it will be more difficult for small businesses to make payments and get paid. Nobody wants to see this at a time when European business loses over €350 billion euro annually in late and unpaid bills. That is why we hope the European Parliament will go back to the Commission’s original proposal in its plenary vote and exclude commercial cards from the legislative scope, in the interests of small business and the economy in general,” added Buckley.
In addition to provisions on commercial cards, MasterCard remains deeply concerned by the intention of the Members of the European Parliament (MEPs) to maintain a “one-size-fits-all” approach to interchange for consumer cards across Europe. This is neither based on reliable data nor clear methodology and ignores the very different market realities between countries. Most importantly, experience from other countries, such as Spain, has shown that it is likely to drive the cost of cards up for consumers and small merchants.
At the same time, MasterCard welcomes the MEPs’ intention not to pick winners and losers and to create equal market opportunities for all payment schemes, but believes that further efforts are needed to cover all relevant players on the market, including American Express and Paypal, according to MasterCard.