On the Call: MasterCard CEO Ajay Banga
On the Call: MasterCard CEO Ajay Banga says European regulators likely to cap swipe fees
MasterCard and other payments companies have been buffeted by U.S. rule changes that limit what fees they can charge to retailers accepting their cards.
Briefing analysts about the company's fourth quarter earnings, President and CEO Ajay Banga was asked if MasterCard faces similar challenges in Europe. Analysts are concerned that European leaders will limit interchange fees, which are paid by retailers to MasterCard whenever a consumer swipes a credit or debit card.
U.S. regulators capped interchange fees on debit cards as part of a sweeping overhaul of financial rules passed in 2010. They have not limited interchange on credit card transactions.
Banga indicated that Europe might take a harder line. Here's the exchange, edited for clarity and length.
Q: Do you agree that Europe is prone to pass regulation that might include permanent interchange rate caps for cross-border transactions over there?
A: That's a politically great statement, but you know better than I do, they love passing regulations. It's just a reality. I don't know what to do about that, other than to tell you they will, at some point in time, do something. In the second quarter of this year, they will likely publish some legislation on interchange.
