Many Consumers Don't Think Lower Interchange Will Result in Lower Retail Price

by Mercator Advisory Group 0

Regulators around the world have been trying to reduce interchange fees on card transactions, saying that high interchange fees force Merchants to raise their prices which in turn hurts consumers. But many in the payments industry don’t necessarily agree with that. And a recent MasterCard study of over 21 thousand consumers in Europe shows that more consumers think lower interchange won’t result in lower prices than those who believe it will happen.

Asked who will make up the “shortfall” if the “retailers’ contribution for accepting cards” is reduced, 79% think it will be them, the consumer, compared to 15% who think it will be the merchants and 14% the banks.

Meanwhile, 44% do not think that retailers will pass on any reductions to customers in the form of lower prices, compared to 32% who think they will.

The study also points to the case in Spain and Australia where interchange was cut by regulators.

In both cases, investigations found that cardholder fees went up and benefits down while there was no evidence that this was offset by lower retail prices.

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