I recently spoke at a roundtable on the EU’s new regulations on Interchange Fees (IFR) and Payment Service Directive (PSD2).
I think the audience was expecting me to talk about the challenges the industry faces but they were in for a surprise – In fact, I see this new set of regulation as a trio of great opportunities:
IFR is an incentive for greater retail acceptance
The European Commission introduced IFR to provide greater transparency and lower fees for retailers (interchange rates are now set at 0.2% for debit cards and 0.3% for credit cards). Retailers are likely to gain most from these lower fees, with the expectation this will be passed onto consumers. We expect to see acceptance grow, as well as explicit preference for electronic payments. We are already seeing innovative retailers driving growth by investing in faster, more convenient and differentiating shopping and checkout experiences.
Promoting the value of electronic payments for the benefit of retailers and consumers
70% of payments in Europe are still cash, and in Italy it’s even higher at 90%. The European Commission states that cash is more expensive for retailers than electronic payments, as well as less convenient and less secure. Electronic payments can even lower queue times, offer higher levels of traceability in the event of fraud, and make it easier to reimburse customers. Given our commitment to electronic payments across Europe, that sounds like a lot of positives!
That is why we call on Italian retailers to work with us on building contactless acceptance at pace. The data shows that consumers love it. We have seen phenomenal growth with monthly spending tripled since last year. Several other markets have made huge leaps in acceptance (Poland, Czech, Slovakia) by expanding the acceptance network while in Italy we’ve launched partnerships with retailers like Tesco and Esselunga. We’ve also already mandated contactless acceptance by 2020, and retailers can contribute to making contactless mainstream across Europe well before then.
Contactless paves the way for mobile and helps reduce the shadow economy
Every week we’re involved in mobile programmes and partnerships launched across our markets driven by consumer demand. In Europe, we already have 10 times the number of acceptance points compared to the US (2 million vs. 250,000). And by working together we can also fight the shadow economy – in Italy we still have a very high level of undeclared activities. Visa payments are traceable, transparent and can consistently help government to fight against shadow economy.
In summary: greater acceptance, more value and increasing transparency – that’s going to be a great trio for Italy.