Visa/MasterCard EU dominance adds impetus to calls for bank-backed competitor

MasterCard and Visa now account for 86% of all payment cards in Europe, as domestic and private label schemes continue their decline, according to data from RBR.

RBR's figures indicate that €9 out of every €10 spent using a payment card in Europe was made on a Visa or MasterCard-branded card - the highest share of any region.

There were 1.5 billion payment cards in circulation in Europe at the end of 2014 which were used for payments worth €2.9 trillion during the year, says RBR.

While both MasterCard and Visa lay claim to equivalent card numbers in circulation, Visa is by far the largest in value, accounting for 54% of card expenditure. Rival schemes from American Express, Discover, JCB and UnionPay account for less than two per cent of the regional card base, unchanged since 2013.

The data adds impetus to the European Central bank's long-voiced concerns over the dominance of MasterCard and Visa in the European payments market. The ECB has been pushing for banks to create a third privately-held card scheme to stir up competition in the market.

The recent EUR21.2 billion deal agreed between Visa Inc and European banks over the sale of Visa Europe has led to increased calls for the banking industry to put the windfall to use to create a competing product to tackle the duopoly enjoyed by Visa and MasterCard.

Any bank-backed rival scheme would be entering an entirely new competitive landscape. Card schemes will no longer be able to compete, to the extent they have in the past, on interchange fees, with the new EU caps of 0.2% for debit cards and 0.3% for pay-later cards. RBR believes that portfolio gains will instead be based on factors such as service levels and scheme fees, an area which might be the final push needed by banks to develop their own system.

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Mastercard Visa

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Comments: (4)

A Finextra member 02 December, 2015, 13:50

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As a consumer I want to have one debit card and most likely one credit card. I will use my cards frequently in my domestic environment for shopping payments, travel some abroad and again use the card for shopping and travel expense payments. I do not select travel destinations based on trade unions like the EU, NAFTA or the OSS (Russian led union if you do not reckognize it. I select interesting countries to visit for leisure, experiences and also go where business may take me. An EU card scheme that does not offer excellent global acceptance in merchant locations and for atm cash is of little interest for me. Sometimes I go to Morocco, Russia, Egypt, Australia and even to the USA and expect ny card to be accepted. Why should by bank offer me a second rate card that does not met my needs? Political reasons?

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Phil Davies - Bancom Europe Ltd - horsham 03 December, 2015, 07:32

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Well said, totally agree. To much politics again, this topic has been debated for decade or more, but the banks dont want it and the consumers dont need it. We need to keep politics out of payments, the interchange debacle is a good example of why. I already see signs of merchant acquiring fees increasing as a result of poitical intervention!

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Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 03 December, 2015, 08:11

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Totally agree with the previous two comments. It's high time regulators turned their spotlight towards merchants: As soon as the no-surcharge rule was removed, merchants have felt free to fleece customers with as high as 7.5% extra fees, disguised as convenience charge, Internet handling charge, and so on. https://twitter.com/s_ketharaman/statuses/625931400634613760

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Richard Sanders - Hermosa Consulting - Southend on Sea 11 December, 2015, 15:14

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I await with interest to see how much of the interchange savings for merchants are passed back to the consumer. I am not aware of a tracking mechanism for this and have seen at least one Retailer led presentation which categorised this going to the botto line. We are already seeing fees intorduced and loyalty value cut and the banks are being blamed. But its not their fault.