Major retailers must take the initiative to improve competition
in the European payments market, European Commissioner for
Competition Neelie Kroes told delegates to a conference convened by
industry body the European Retail Round Table (ERRT). In
particular, she emphasised the European Commission’s and European
Central Bank’s strong desire that there should be more than just
two pan-European card schemes in Europe at the end of the process
of establishing the Single Euro Payments Area (SEPA).
“Retailers and consumers are increasingly worried that with less
choice they will inevitably pay more as banks are led to abandon
efficient and cheap national systems. In such a scenario, SEPA
would, despite all its pro-competitive goals, end up delivering at
best a European duopoly,” said Kroes. The reduction in competition
would be “both negative and highly damaging,” she warned.
The Discover model
Major retailers have a key role to play in ensuring that a duopoly
(MasterCard and Visa) does not become a reality in Europe, she
continued. “Look, for example, at what Discover did in the 1980s
 in the US,” said Kroes. “Forced by the Visa/MasterCard
duopoly, the biggest US retailer of the day [Sears, Roebuck]
decided to create a completely new alternative brand.”
She added that while she was not suggesting that European
retailers should copy exactly the same model, SEPA provides
excellent opportunities for retailers to analyse their needs in the
field of payments and to take initiatives. For example, said Kroes,
major retailers could identify existing efficient national debit
schemes and assist them to grow into pan-European debit card
schemes. Emerging payment alternatives may also be worth pursuing,
said Kroes, who urged retailers to “have the courage of your
convictions and back them”.
She added that SEPA will make it possible for more players to be
present in the market. “And as always, the greater the competition,
the better the prospects for innovative, high-quality products at a
fair price,” said Kroes.
ERRT represents retailers with a combined revenue of €300
billion ($445 billion).