“The SEPA rates support MasterCard’s overall SEPA strategy and represent the final step towards Maestro’s SEPA Cards Framework compliance,” said Javier Perez, President, MasterCard Europe. “The rates are designed to promote – over time – convergence to a single interchange rate structure across the Euro Zone, in line with the objective as set out recently by the European Central Bank.”

“Our new Maestro interchange rates are part of our overall SEPA strategy to support European banks in the creation of a competitive, transparent and innovative Single Euro Payments Area,” continued Perez. “We believe these rates are not only competitive, but – along with other key elements of MasterCard’s SEPA strategy – will encourage the continuing replacement of cash with electronic payments and promote the reduction of fraud through the latest chip technology.”

With these new rates and increased competition resulting from the introduction of a Maestro four-party model** it is anticipated that total costs to merchants for SEPA transactions will come down, on average, across the SEPA region over time. A four-party SEPA model opens up the market to new entrants, leading to competitive offers on all major cost items for merchants such as the merchant service charges (MSC), terminals and telecommunications.

In particular, for cross-border Maestro® POS transactions, the fall-back interchange rates are significantly reduced versus current intra-EEA cross-border rates. For a typical transaction of 50 euros, the new Maestro SEPA interchange rates will be between 9 and 20 euro cents – as compared with the current Maestro intra-EEA interchange rates of 25 to 59 euro cents.

A summary table of the new rates is available below. Full rates and accompanying information is posted on MasterCard’s website. Go to – www.mastercardworldwide.com and click on ‘Interchange Fees Europe’. The new rates are part of the evolution of Maestro® to a true SEPA product based on a SEPA four-party model designed to drive benefits for all parties in a payment transaction, including:

For Consumers:
- increased international acceptance of their cards
- a common debit card experience across Europe
- more innovative card products and solutions

For Merchants:
- enhanced competition for card acceptance services – driving increased efficiencies and increasing value, particularly to small and medium size merchants
- increased standardisation – helping to reduce technology costs such as terminals
- greater innovation – increasing the payment options available to merchants (such as offline authorisation for low-value payments)
- reduction of rates as compared to current intra-European rates - additional cost savings through pan-European acquiring
- access to a larger card base

For Banks:
- the ability, over time, to consolidate international card processing activities onto common platforms – reducing costs with increased efficiencies
- innovative debit products to support competitive advantage in the market-place, and
- the ability to expand business across all countries in the Euro Zone.

The SEPA fall-back interchange rates will apply to Maestro euro transactions within and/or between Euro Zone countries. In some countries, domestic interchange rates may differ initially based on local arrangements. MasterCard Europe will monitor future market and regulatory developments in order to ensure that Maestro remains an attractive SEPA payment alternative for consumers, merchants and banks.

“MasterCard believes that the best model for payments in Europe is a SEPA four-party model because it enables multiple issuers and acquirers to compete for the business of merchants and consumers across the Euro Zone, helps create a consistent cardholder and merchant experience, encourages innovation, and promotes greater efficiency, transparency and choice,” concludes Perez.

Notes to Editors

*The interchange fee is the amount that an acquirer (i.e. the merchant's bank) pays to the issuer (i.e. the cardholder's bank) for a Maestro transaction. MasterCard receives no portion of the interchange fee. The complete specifications for qualifying for each of these rates will be posted on MasterCard's website. MasterCard’s SEPA fall-back rates will apply as the default in the absence of local or bilateral arrangements.

Countries included in SEPA are Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Slovenia and Spain. More countries will be added over time as they join the Euro Zone. NB: MasterCard will also apply the SEPA rates to some territories technically not part of the EU i.e. Andorra, Monaco, San Marino and Vatican City.

The European Payments Council is an industry self-regulatory body (recognized by the EU as its main interlocutor on SEPA) which has developed the SEPA Cards Framework as the basis for the creation of a single harmonized, open and interoperable European payment market. It has been designed to ensure the widest possible acceptance of cards at retail POS and ATMs throughout SEPA.

The Maestro SEPA fall-back rates per transaction type are as follows:

See MasterCard’s website for complete rate qualification requirements
(1) Applicable to full chip transactions (Chip/EMV card at EMV terminal)
(2) Eligibility criterion: above 20 million Maestro PIN-based transactions per year

The European Central Bank’s SEPA Report

The ECB (European Central Bank) has recently published a SEPA report dedicated exclusively to developments in the cards market. The report seeks to complement the SCF by establishing nine further provisions that a SEPA-compliant card scheme should comply with. Central to the provisions, the ECB stresses the need for interoperability, a single interchange fee, long-term strategy, greater transparency and competition and a future-proof strategy for fraud reduction.

**Creating a common, competitive European payments market based on a four-party model

Under the four-party model, the roles performed in the payment card transaction are clearly separated between acquirers (the banks that negotiate with merchants to accept Maestro and other payment cards) and issuing banks (those who offer Maestro debit cards to consumers). This helps drive efficiency and facilitates new players to enter the payment market, thereby boosting competition, which is a key objective of the European Commission and the European Central Bank in calling for a Single Euro Payments Area.

A four-party SEPA model also increases the opportunity for cross-border issuing and acquiring. Issuers have the opportunity to more easily issue cards across countries. Acquirers can offer services to merchants across countries, resulting in greater choice for merchants. Merchants, especially the larger ones, can centralize their transactions, gaining benefits of scale.

A key element of this model involves correcting the cost imbalances between issuing banks and acquiring banks in providing services to both cardholders and merchants by introducing appropriate interchange rates. Issuing banks incur a higher portion of the costs of items such as security and fraud protection technology, payment guarantee for merchants, as well as developing payment innovations and billing and administering millions of debit card accounts. If there were no interchange fee, issuers would not be in a position to offer attractive products that benefit cardholders and merchants.

MasterCard's SEPA interchange rates have been set to encourage cash substitution with electronic forms of payment, due to the high cost of cash for consumers and merchants. The flat and ad valorem Interchange rate structure addresses the economics of the full range of transaction values and encourages cash substitution for low-value payment while recognizing the costs and risks of higher value payments.