Finextra reports:Antitrust: Commission market tests Visa Europe's commitments to cut Multilateral Interchange Fees (MIFs) for debit cards transactions - frequently asked questions.Interchange fees are charged by a cardholder's bank (the 'issuing bank') to a merchant's bank (the 'acquiring bank') for each sales transaction made at a merchant outlet with a payment card.
Interchange fees are either agreed bilaterally, between one issuing and one acquiring bank, or multilaterally, by a number of issuing/acquiring banks or by means of a decision binding all banks participating in a payment card scheme. The industry refers to these multilateral interchange fees as "MIFs". A MIF can be a percentage, a flat fee or a combined fee (percentage and flat fee).
When a customer uses a payment card to buy from a merchant, the merchant receives from his bank (the acquiring bank) the sales price less a 'merchant service charge', the fee a merchant must pay to his bank for accepting the card as means of payment for that transaction. A large part of the merchant service charge is determined by the interchange fee. The customer's bank (the issuing bank), in turn, pays the acquiring bank the sales price minus the MIF and the sales price is deducted from the customer's bank account. The MIF is therefore a cost that is finally charged to the merchant (through the reduction of the purchase price) who passes the costs on to consumers in the price level of the good or service.
What are the Commission's competition concerns as regards interchange fees?
Continue Reading at Finexrtra
Finextra reports:Antitrust: Commission market tests Visa Europe's commitments to cut Multilateral Interchange Fees (MIFs) for debit cards transactions - frequently asked questions.Interchange fees are charged by a cardholder's bank (the 'issuing bank') to a merchant's bank (the 'acquiring bank') for each sales transaction made at a merchant outlet with a payment card.
Interchange fees are either agreed bilaterally, between one issuing and one acquiring bank, or multilaterally, by a number of issuing/acquiring banks or by means of a decision binding all banks participating in a payment card scheme. The industry refers to these multilateral interchange fees as "MIFs". A MIF can be a percentage, a flat fee or a combined fee (percentage and flat fee).
When a customer uses a payment card to buy from a merchant, the merchant receives from his bank (the acquiring bank) the sales price less a 'merchant service charge', the fee a merchant must pay to his bank for accepting the card as means of payment for that transaction. A large part of the merchant service charge is determined by the interchange fee. The customer's bank (the issuing bank), in turn, pays the acquiring bank the sales price minus the MIF and the sales price is deducted from the customer's bank account. The MIF is therefore a cost that is finally charged to the merchant (through the reduction of the purchase price) who passes the costs on to consumers in the price level of the good or service.
What are the Commission's competition concerns as regards interchange fees?
Continue Reading at Finexrtra
Mastercard Inc. (MA) has had a bumpy ride so far in 2010. After posting a new recovery high near $270 in early January, the stock lost roughly 20% of its value after the company issued a disappointing fourth quarter report.
While the card issuer’s revenue was up 6% and earnings actually increased by 31%, investors were less than pleased. Nearly all of the growth in earnings came as a result of cost cutting within the firm and even the 6% increase in revenue was primarily a function of currency fluctuations and not a real growth in business...Continue Reading
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