MasterCard @ MWC14: Innovation in times of regulatory uncertainty

mastercard

Written by Javier Perez, President of MasterCard Europe 

????????????????

Javier Perez, President of MasterCard Europe

It was that time of the year again. At the end of February, Mobile World Congress opened its doors in Barcelona for a week. This year’s edition saw the presentation of a myriad of innovative solutions in the mobile space. Some of the new devices and solutions on display seemed truly groundbreaking and I was amazed by the positive energy and pioneering spirit that that could be felt during those days.

MasterCard did not stand back. As we continue to work towards a world beyond cash, we always strive to develop new solutions that fit consumers’ needs and (future) habits. And MWC was the perfect platform to present some of the new partnerships and solutions that will get us there.

Whether the aim was to make NFC-mobile payments more secure through Host Card Emulation or to enable consumers to make secure, yet simple and fast, purchases within a mobile app, security of payments was very much top of mind. At the same time, new research by MasterCard and Prime Research which analysed 13 million social media conversations, showed improved sentiment toward mobile payments and a rapid growth in consumer use and merchant acceptance. Against this background, we also teamed up with companies like Syniverse to enable card transactions for users only when they have their mobile device switched on in a specific location abroad and with large European telecom companies to create a new mobile platform and accelerate the development of mobile payments.

I found these and many other new innovations very encouraging as it is only through innovation that payments can become easier, faster, safer and bring real added value to consumers and retailers.

However, as I left Barcelona and returned to Brussels, I worried that such great developments may come to a sudden halt, at least in Europe. As new legislation to regulate payment cards in Europe is currently being developed, I increasingly got the impression that the consequences of the measures on the table were never properly thought through.

Let’s take the issue of interchange fees for electronic payments as an example which Europe wants to cap. The electronic payment system offers incredible benefits to consumers, retailers, businesses and governments. Like any valuable service, with an advanced technology behind it, it comes at a cost. Therefore, the idea behind interchange is to balance the interests of both the consumer or the cardholder and the merchant.

Of course, it is in MasterCard’s interest to get the interchange levels right, but for different reasons than commonly believed. We want to ensure that all those who benefit continue to use electronic payments, and this means each paying their fair share for the service.  This is why the interchange level should be neither too high nor too low. Rather it should be based on each market’s specific conditions.

While we share the broad objectives of the European Commission we have consistently expressed our concern that the proposed solution of inflexible interchange caps would drive the cost of cards up for consumers and thereby undermine the business case for innovation. This concern is based on recent practical experience from countries like my native Spain, where legislation to cap interchange fees resulted in cardholder fees increasing by over 50% with no evidence of retailers passing on savings through lower prices.

Last month, the European Parliament even decided to include commercial/business cards under the caps. I found this very surprising as these cards fulfill an entirely different role than consumer cards. They are used by small businesses to replace manual invoices, cheques and bank transfers (which is not the case for consumer cards). The benefits linked to this are faster, more efficient receipt of payments for merchants and an important source of credit for business cardholders. Regulating commercial cards in the same way as consumer cards would be very bad for small businesses and would lead to an 80% increase in cardholder fees for them.

The current proposal effectively means shifting the retailers’ contribution to the electronic payments system onto consumers and small businesses. I do not think it is fair to ask them to cover the costs of retailers who derive huge benefits from the payments system – from security of payments to lower costs compared to cash.

My concern also stems from the absence of any reliable justification for proposing “one-size-fits-all” fees across over 30 countries, where market conditions vary considerably. These doubts are shared by various national legislators. The Commission hasn’t released any reliable data to justify caps on fees that were already proposed more than seven months ago. As a result, so far all the discussions have been based primarily on political preferences, rather than economically proven assumptions.

There is no doubt that the idea of capping fees is politically attractive – but it makes no sense if, in the end, it favours retailers over consumers and focuses only on a few market players. I believe that with a number of new, highly competitive and successful market entrants, any future regulation should ensure that all players are treated equally.  It should not single out certain schemes such as MasterCard or VISA, and hand a competitive advantage to other, often more expensive players, such as Amex, who operate under a different model. This would be neither fair to consumers nor would it contribute to the establishment of a truly innovative European market place.

 

Javier Perez, President MasterCard Europe, MasterCard Worldwide

Javier Perez is president of MasterCard Europe, and a member of the MasterCard Management Council.  Mr. Perez is responsible for the Europe Region, encompassing 53 countries and serving 9,000 MasterCard financial institutions. 

Before taking up his present role, Mr. Perez was president of the Latin America and Caribbean (LAC) region.  Under his leadership, LAC achieved significant growth, and was one of the company’s fastest-growing regions. He joined MasterCard in 1996.

A native of Spain, Mr. Perez has masters’ degrees from the ESADE University, Spain and Thunderbird School of Global Management USA, for whom he is a Fellow of the Board.  

the sting Milestones

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Humanitarian aid: €24.5 million in Southern Africa and Indian Ocean region

Radio still a powerful worldwide tool for ‘dialogue, tolerance and peace’: Guterres

Cities are at the heart of our journey to net zero. Here’s why

UN chief condemns attack targeting international forces in northern Mali

Data capture, not disclosure, is the way to meet our climate goals

Data protection: Commission decides to refer Greece and Spain to the Court for not transposing EU law

President Juncker temporarily transfers portfolio responsibilities following departure of two Members of the European Commission

The world needs carbon-neutral flying. Here’s how to bring it one step closer

Two major EU projects falter; the Schengen Agreement now freezes and Eurozone fails to resolve the Greek enigma

How to build public trust in a sustainable energy future

Consumer protection: Commission welcomes political agreement by Council on the Representative Actions Directive

Sustainable transport can’t just depend on batteries. Here’s why

Conference on the Future of Europe: preparations continue

Global initiative launched to keep top sports events safe from terrorism

With security improving in DR Congo’s Kasai, thousands of refugees head home from Angola

EU long-term budget deal must be improved for Parliament to accept it

New energy Projects of Common Interest for the Energy Union built on European solidarity

How leaders can use ‘agile governance’ to drive tech and win trust

Trump’s self-centered politics unravels

Trump ostracized by his party and world elites but still remains in course; how can he do it?

Commission launches new edition of the Cultural and Creative Cities Monitor 2019

How we can win the war against antibiotic resistance

‘Maintain calm’ and ‘exercise patience’ UN envoy urges, as Nigeria heads to polls

The Recruitment of Children as Soldiers Explained

‘The time for action is now’ senior UN peacekeeping official says, urging support for regional force combating Sahel terrorism

Eurobarometer: Not a single answer about what the Banking Union will cost to citizens

LGBTQ+: The social evolution of a minority

What is ‘circular denim’ and why are top brands redesigning jeans?

‘Abhorrent’ ambulance attack in Libyan capital imperils life-saving work, warns UN

Removing deadly mines means ‘new horizons and hope’, clears a path to SDGs, says UN chief

FROM THE FIELD: Murals help heal wounds of bloody conflict in Guatemala

EU mobilises international donors to support Venezuelan refugees and migrants and countries in the region

Resolving Israel-Palestinian conflict, ‘key to sustainable peace’ in the Middle East: Guterres

Combatting terrorism: EP special committee calls for closer EU cooperation

This ceramic ink can 3D-print bones directly into a patient’s body. Here’s how

Tanzania’s Dual Burden

5 insights to guide ASEAN’s digital generation in a post-pandemic world

Children suffering ‘atrocities’ as number of countries in conflict hits new peak: UNICEF

Ageing: Looming crisis or booming opportunity?

UN mourns death of former Secretary-General Kofi Annan, ‘a guiding force for good’

Turkish and Greek Cypriot leaders ready for talks with UN chief on improved relations

Eurozone: Economic sentiment-business climate to collapse without support from exports

Can climate change wait for the US to rejoin the Paris agreement?

MWC 2016 LIVE: Gamelab founder talks Apple TV, VR and monetisation

We need to talk about mental health at work, say employees

Hungary: Commission takes next step in the infringement procedure for non-provision of food in transit zones

This is the ever-changing state of the world’s top cities

Women outliving men ‘everywhere’, new UN health agency statistics report shows

How to outsmart bias when you’re recruiting

Hackers can use public USB chargers to steal personal data. Here’s what you need to know about ‘juice jacking’

EU integration: MEPs want to end permanent opt-outs from EU law

5 things you need to know about water

FROM THE FIELD: Persons with disabilities bike towards sustainability

‘Everyone must be on board’ for peace in Central African Republic: UN’s Lacroix

Commission launches debate on a gradual transition to more efficient and democratic decision-making in EU tax policy

Meet the man who drove from the Netherlands to Australia without visiting a gas station

Building a Climate-Resilient Future – A new EU Strategy on Adaptation to Climate Change

UN study projects $32 billion loss for UK post no-deal Brexit

IMF launches a new offensive against Germany

‘Antagonistic gestures and accusations’ drown out Kosovo dialogue hopes, Security Council hears

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: