Total hores anuals
ELS PROGRAMES DE DIFUSIÓ CULTURAL
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This section discusses:
• weighted average MSCs for national and international debit card networks; and
• MSC for different categories of merchants; and
• countries with highly regulated or zero MSCs.
Weighted average MSCs for national and international debit card networks
As with the trend in the weighted average MSC charged to merchants on credit card transactions, the weighted average MSC levels across all debit card payment networks decreased over the 2000-2004 period (see Figure 35).The lowest average MSC level was reported in national debit networks, the highest for Maestro cards (MasterCard network) (1.17% vs 1.60%).
Across the EU-25 and over the 2000-2004 period, the weighted average MSC rate charged in national debit networks was on average 30% lower than the corresponding Visa debit MSC rate, and almost 40% lower than the corresponding Maestro MSC rate. In contrast, the average difference between the weighted average MSC rates charged on Maestro and Visa debit transactions was quite limited and amounted to only about 6%.
As with weighted average MSC levels on credit cards, the weighted average MSC charged on debit cards showed considerable variation across the Member States. According to the data, the weighted average MSC fees in the Visa network varied from a low of 0.32% up to roughly 1.9%, the difference being around 500%. In the MasterCard network, the lowest weighted average MSC was reported to be 0.36%189, while the highest was above 2%, which is 6.5 times higher.
Figure 35
Weighted Average MSC Rates Charged for Debit Cards by International Payment Card Networks (Maestro & Visa Debit) and National Debit Networks, 2000-2004, %
0,015 0,515 1,015 1,515 2,015 2000 2001 2002 2003 2004 Year W e ig h ted A v er ag e M S C , % Maestro Visa Debit National Debit
Source: Commission services retail banking sector inquiry, 2005-2006
Maestro MSC rates tended to exceed (in some cases – significantly) those for national debit cards. For example, in the case of one country, the weighted average MSC rate in the
189 For some countries, no cross-reference to Visa levels was possible, as the set of countries with available
MSC levels for the two networks differed somewhat in each case. Generally speaking, the maxima and minima found in this analysis should be treated as “local” rather than “global”, given that no entire set of data was available. Nonetheless, the variation noted will, if anything, be increased by adding countries to the analysis.
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domestic debit network in 2004 was less than half the corresponding rate in the Maestro network.
MSC for different categories of merchants
When the MSC levels charged to smaller and larger merchants for debit card transactions are analysed, it is clear that smaller merchants pay far higher MSC rates to the large international networks (MasterCard and Visa). In the national debit card networks, which carry the bulk of payment card volumes (national debit transactions sometimes account for about 80% of the total domestic card transaction volume in a given country), smaller merchants on average have to pay 7% higher MSC rates as compared to larger merchants. The difference in the fees charged to small and large merchants is about 10 times smaller in national debit networks than in the MasterCard and Visa networks (both for debit and credit cards)190. If the explanation for the different treatment of larger versus smaller merchants is only the scale factor, it should also apply to the national debit networks. As the difference in national debit networks is much smaller, however, it may be asked whether small merchants pay a premium for the use of the MasterCard and Visa networks and what justification there is for this.
Figure 36
Comparison of Weighted Average MSC levels Charged on Debit Cards to Larger and Smaller Merchants across EU-25, 2004, %
0,0000 0,5000 1,0000 1,5000 2,0000
Maestro Visa Debit National Debit
Payment Card Networks
MS C , % Larger Merchants Smaller Merchants ~+70% ~+60% +7%
Source: Commission services retail banking sector inquiry, 2005-2006
Countries with highly regulated or zero MSCs
As argued above, acquiring institutions are believed to use MSCs mainly in order to pass on to merchants the cost of the interchange fee they pay to issuing institutions for each card transaction. It is also alleged by most market players that interchange fee payments
190These figures for the MSC in national (domestic) networks, however, do not cover other per-transaction fees
that merchants in some countries may end up paying to local processors. These per-transaction processing fees may differ for small and large merchants, given their different transaction volumes and hence different “scale” factors. MasterCard and Visa MSC rates, however, seem to be “final” prices paid per transaction and therefore already include processing fees. Thus, once adjusted for the possible supplementary per-transaction processing fee, the price difference for small and large merchants in national networks may be somewhat greater.
Where the processing fee is already incorporated in the final MSC paid in national networks, the somewhat lower price difference for small and large merchants may also be explained by the fact that national processors tend to handle the entire volume of payments, including credit transfers and direct debits. This significantly raises the overall scale of the processing and therefore may, to some extent, weaken the incentive of processors (and therefore acquirers — if the fee is passed on through acquirers) to reward larger merchants for higher volumes. This therefore may, among other things, limit the price difference for larger and smaller merchants.
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account for the substantial bulk of total acquiring costs. Some domestic debit networks can operate without an interchange fee mechanism, but with an MSC, while nonetheless securing sufficient transaction volumes and wide card acceptance. The Netherlands, Finland are examples of such systems. Denmark is a particular case where there is no interchange and no MSC, as a result of legislation passed in March 2005191.
B.4.3. The effect of blending and surcharges on the setting of MSCs