Study, commissioned by MasterCard, outlines potential consequences of EC proposals
Irish consumers could end up paying more than €100 million extra in annual credit and debit card fees under new European Commission proposals, a new study claims.
The research, carried out by economist Anthony Foley on behalf of MasterCard, examined the potential consequences that could result from moves to reduce the contribution merchants make to funding the cost of card payments.
The study suggests the changes could lead to annual shortfall of €107 million in funds to cover costs incurred in running Ireland’s card payments system.
The knock-on effects of this, the report claims, would be additional annual charges of €89 million for credit card users and €18 million for debit card users in Ireland - equivalent to €42.50 per credit card and €4.60 per debit card.
The report suggests the changes would also “act as a barrier to Government efforts to reduce the excessive role of cash and cheques in the Irish payments system,” the report said.
It noted that a substantial move away from using cash and cheques - in line with the Government’s national payments plan - would provide a saving of over €1 billion per annum for the economy.
Mr Foley said: “The most important fact arising from the analysis is that over €100 million annually will be withdrawn from the Irish electronic payments system, over €500 million in five years.”
“It is very difficult to assume that such a large withdrawal would not have an adverse effect on the aim of bringing the payments system to best international practice.”
“The current EU intention to reduce interchange fees is clearly inappropriate for current and near future Irish economic and banking circumstances,” add Mr Foley.
“The Government should not support the proposed regulation without first undertaking a comprehensive analysis of the possible consequences on consumers, bank revenue and the wider economy.”
In July, the Commission published a series of proposals to reduce the contribution merchants make to funding the cost of card payments as part of its regulatory approach to Europe’s electronic payments system.
The proposals include a possible cap on interchange fees, which are the fees a retailer’s bank pays a consumer’s bank to cover a portion of the costs associated with card transactions such as payment guarantees, risks due to fraud and bad debt, and running the payments network.