European commission wants lower prices for credit cards.(Headline)

In June 2005, the European Commission decided to launch a sector inquiry into retail banking and business insurance to assess whether there is enough competition in these markets to deliver full benefits to consumers and small- and mediumsized enterprises (SMEs).

"The payment cards industry in Europe remains national, and some local players are preventing competition from developing," said Competition Commissioner Neelie Kroes.

According to a preliminary report into the payment card industry published on April 12, 2006 by DG Competition, the sector is in breach of EU antitrust rules.

The report identifies large price differences as one of the main problems. In some EU countries, consumers pay 100 percent more for Visa and MasterCard services than in other countries. Business charges can vary across the EU-25 with up to 500 percent for Visa and 650 percent for MasterCard. Furthermore, SMEs pay up to 70 percent more for the use of payment cards than large companies. These findings, plus high profits of 1.35 trillion ($1.7 trillion) in 2004 by the payment card industry, raise the Commission's concern that these markets are not yet competitive.

Furthermore, the report reveals several structural, technical and behavioral barriers to market entry such as different technical standards within the EU, which prevent service providers to operate on a ...