Insights Magazine from CMSPI
Page 23 | November 2021
MERCHANTS CONTINUE THE FIGHT AGAINST UNLAWFUL INTERCHANGE FEES
In 2020, the UK Supreme Court upheld a ruling by the Court of Appeal that multi-lateral interchange fees constituted a restriction of competition in the payments industry. The Court’s judgment confirmed European retailers’ opportunity to reclaim historic interchange fees, with the potential resultant pay- out estimated at over €85 billion. In 2021, that pay-out grew considerably, as the Competition Appeal Tribunal held on summary judgment that claimants bringing interchange claims through the English Courts could apply English Law to intra- and inter-regional transactions. To learn more about how these and other regulatory developments can impact your business, please listen here.
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MASTERCARD CREATES NEW UK MARKET DEVELOPMENT FUND FEE
Mastercard has levied a new market development fund fee on merchants in the United Kingdom and Ireland. The new fee represents a transfer of costs away from another Mastercard fee, rather than a cost increase. Nonetheless, as of August there had been over 50 new interchange and network fee changes announced by Visa and Mastercard in Europe just for 2021. Development fund fees, which many experts believe are essentially scheme fees, across Europe account for some of those increases and present a reconciliation challenge for merchants. Market development funds, also known as innovation funds or card payment promotion funds, are typically used by the card networks to pay for projects aimed at increasing spending, awareness and use of payment cards. 1 In Europe, the fees tend to
vary greatly across merchants. Variables such as country of domicile, countries of operation, channels of operation and accepted payment methods represent just some of the factors on which the fees are calculated. Given the complexities involved in calculating the fees, internationally operating European merchants will be increasingly challenged to reconcile the fees as each market of operation will likely have different charging structures. The U.K. is one of Europe’s most developed payments markets, being one of the earliest adopters of contactless payments and a leader in open banking transactions. Given that development funds are normally intended to encourage card use, many think it’s unclear what Mastercard’s goal is in such an already highly developed market.
BLOCKED FROM BUYING PLAID, VISA SEEKS TO ACQUIRE TINK
Visa has announced plans to purchase Swedish data aggregator and open banking solutions provider Tink for €1.8 billion ($2.15 billion), one of the largest acquisitions in Swedish history. Tink provides its application programming interface to over 3,400 European banks and financial institutions and Visa appears to be eyeing expansion into the European open banking environment.
The deal comes in the aftermath of Visa’s $5.3 billion attempt to acquire U.S. data aggregator Plaid, which was abandoned in early 2021 after the U.S. Department of Justice filed an antitrust complaint claiming Visa was trying to quash a “competitive threat.” 2 The Visa-Tink transaction is currently pending and will be subject to regulatory approvals and other closing conditions.
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