Payment Card Interchange Fees: Assessing the Effectiveness of Antitrust Investigations and Regulation in Europe

Abstract

This article provides empirical evidence on the impact of different interventions by public authorities on interchange fees (IFs) and cross-border multilateral interchange fees (MIFs) on both adoption and usage of payment cards in the EU-27. Controlling for social and financial characteristics across countries, we find no statistically significant effects on payment card adoption. However, we find mixed results on payment card usage after specific regulatory events: IFs regulation and investigations seem to have increased the number of transactions per card, mandatory reductions in IFs seem to have a negative impact on the value of transactions per card, and antitrust and regulatory scrutiny related to MIFs is found to increase the number of transactions per card but to reduce the value of transactions per POS. Additionally, the results show that specific regulatory and antitrust investigations related to both IFs and MIFs have statistically significant effects on card transactions as a proportion of all transactions made in a specific country.