Multilateral Interchange Fees: Competition and Regulation in Light of Recent Legislative Developments

ECRI Research Report No. 14

48 Pages Posted: 13 Feb 2014

See all articles by Maria Chiara Malaguti

Maria Chiara Malaguti

Catholic University of the Sacred Heart, Rome

Alessandra Guerrieri

Cleary Gottlieb Steen & Hamilton LLP - Rome Offiice; Bocconi University

Multiple version iconThere are 2 versions of this paper

Date Written: January 31, 2014

Abstract

Two-sided payment card markets generate costs that have to be distributed among the participating actors. For this purpose, payment card networks set an interchange fee, which is the fee paid by the merchant’s bank to the cardholder’s bank per transaction. While in recent years many antitrust authorities all over the world - including the European Commission - have opened proceedings against card brands in order to verify whether agreements to collectively establish the level of interchange fees are anticompetitive, the Reserve Bank of Australia - as a regulator - has directly tried to address market failures by lowering the level of interchange fees and changing some network rules. The US has followed with new legislation on financial consumer protection, which also intervenes on interchange fees. This has opened a strong debate not only on legitimacy of interchange fees, but also on the appropriateness of different public tools to address such issues. Drawing from economic and legal theories and a comparative analysis of recent case law in the EU and other jurisdictions, this work investigates whether a regulation rather than a purely competition policy approach would be more appropriate in this field, considering in particular, at EU level, all of the competition and regulatory concerns that have arisen from the operation of SEPA with multilateral interchange fees. The paper concludes that a wider regulation approach could address some of the shortcomings of a purely antitrust approach, proving to be highly beneficial to the development of an efficient European single payments area.

Keywords: multilateral interchange fees, SEPA, interchange fees

Suggested Citation

Malaguti, Maria Chiara and Guerrieri, Alessandra, Multilateral Interchange Fees: Competition and Regulation in Light of Recent Legislative Developments (January 31, 2014). ECRI Research Report No. 14, Available at SSRN: https://ssrn.com/abstract=2395118

Maria Chiara Malaguti (Contact Author)

Catholic University of the Sacred Heart, Rome ( email )

Largo F. Vito, 1
Rome, 00168
Italy

Alessandra Guerrieri

Cleary Gottlieb Steen & Hamilton LLP - Rome Offiice ( email )

Piazza di Spagna 15
00187 Rome
Rome
Italy

Bocconi University ( email )

Via Sarfatti, 25
Milan, MI 20136
Italy

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