Public Policy

In many markets in Europe, demand for cash is in decline. Individuals, businesses and governments are increasingly choosing to transact digitally because of the greater benefits that this offers to them, set against the restrictions and higher costs that cash imposes. However, cash will continue to be part of a healthy, competitive mix of payment methods for some time across Europe as some individuals prefer to use cash

As such we believe a choice of cash and digital payments should continue to be available to these individuals and businesses to meet their preferences, for as long as it is required. Indeed our innovation is helping to ensure that those that want to use cash, can continue to do so in a number of markets across Europe, e.g. cashback.

However, in an increasingly digital European economy, cash will not play a long-term role in addressing financial exclusion. As cash circulation continues to decrease, there is a need for improving understanding of digital payments and in doing so reducing both digital and financial exclusion.

Legislative and regulatory initiatives to support access to cash should be reflective of the changing role of cash in the European economy, but also seek to address the longer-term issues around exclusion that reduce payment choice for many individuals and businesses.

Mastercard recognizes the importance of the Alternative Fuels Infrastructure Directive (AFID) for a sustainable Europe and welcome the European Commission’s review of the directive, providing an opportunity to make Europe the leader for the adoption of electrical vehicles.

For any infrastructure which relies on interactions and transactions with consumers, the payment component is crucial in ensuring fast adoption and wide usage. In the specific case of electric vehicle charging, the payment component could indeed become a great barrier to cross-border travel and transport, and to proliferation of electric vehicles in general.

A consumer survey has been commissioned by Mastercard in seven EU member states, to assess consumers’ attitude towards different means of payment for electric vehicle recharging transactions. The results clearly shows that the European consumers would prefer to pay with physical debit or credit cards for such transactions, and that they consider payment cards to be the most convenient, the best for a broad uptake of e-mobility, and the best for international travel as well. Also, consumers confirm that a universal and broadly accessible payment method should be available at all public recharging stations.

Mastercard call for a mandate through AFIR, to require operators of recharging points accessible to the public to implement low-barrier, pan-European payment solutions in their infrastructure. Taking into consideration the current payment landscape, and the need for cross-border interoperability with a frictionless user experience and high degree of scalability, Mastercard advocates for a card-based, open-loop solution, which does not require consumers to register for the electric vehicle charging service.

To assess consumer sentiment and demand on payments for electric vehicle charging, in Summer 2021 Mastercard conducted a consumer survey in seven EU member states: Austria, France, Germany, Italy, Poland, Spain and Sweden. The survey was representative of the entire adult population in all surveyed countries, thus reflecting the needs of all potential future drivers of electric cars. Survey results clearly show that the overwhelming majority of consumers would prefer to pay by physical debit or credit cards for the EV charging transactions, as this is the most convenient, best for international travel, and best for a broad uptake of e-mobility in Europe. In addition, 71% of consumers agree that there should be a universal method of payment accepted at all charging points in Europe, in order to ensure easy and seamless access for all European residents. Based on these results, European regulation should require acceptance of payment cards as a minimum standard of payment at all public charging points in the EU, irrespective of the power output.

The rapid pace of technological change, including the advent of cryptocurrencies, has led policymakers around the globe to consider the impact of this transformation on the future of payments. Having operated multiple secure, safe, scalable payment networks around the world for many years, Mastercard is committed to bringing that expertise to bear in support of the design, testing, and deployment of CBDC networks where central banks choose to pursue their development.

Over the past few years Mastercard has been meeting with central banks around Europe, sharing our payment expertise as they explore how different models of issuance, distribution, interoperability and security could impact their economies.

Mastercard believe that supervised private intermediaries should have the opportunity to use their expertise and participate in the provision of CBDC payment services. Open and competitive payment ecosystems are critical to enabling access, adoption, and use of payment options that serve a wide range of user needs and preferences. Moreover, ongoing payments innovation, expanded financial inclusion, and the efficiency of national and international payment flows all depend on vibrant private sector competition in the provision of payments.

Interoperability between payment systems avoids closed loops that reduce the fungibility of money, fragment liquidity, and limit competition. Mastercard have therefore launched a CBDC Testing Platform, enabling central banks to explore interoperability with other stores of value (e.g. commercial bank deposits, e-money etc.), which would also play an important role in strengthening the domestic payment ecosystem and reinforcing the role of central bank money at its core.

The rapid pace of technological change, including the advent of cryptocurrencies, has led policymakers around the globe to consider the impact of this transformation on the future of payments. Having operated multiple secure, safe, scalable payment networks around the world for many years, Mastercard is committed to bringing that expertise to bear in support of the design, testing, and deployment of CBDC networks where central banks choose to pursue their development.

Over the past few years Mastercard has been meeting with central banks around Europe, sharing our payment expertise as they explore how different models of issuance, distribution, interoperability and security could impact their economies.

Mastercard believe that supervised private intermediaries should have the opportunity to use their expertise and participate in the provision of CBDC payment services. Open and competitive payment ecosystems are critical to enabling access, adoption, and use of payment options that serve a wide range of user needs and preferences. Moreover, ongoing payments innovation, expanded financial inclusion, and the efficiency of national and international payment flows all depend on vibrant private sector competition in the provision of payments.

Interoperability between payment systems avoids closed loops that reduce the fungibility of money, fragment liquidity, and limit competition. Mastercard have therefore launched a CBDC Testing Platform, enabling central banks to explore interoperability with other stores of value (e.g. commercial bank deposits, e-money etc.), which would also play an important role in strengthening the domestic payment ecosystem and reinforcing the role of central bank money at its core.

Mastercard is committed to preventing our products and services from being used in a manner that facilitates criminal purposes, money laundering, financing of terrorism or violating economic sanctions.

Mastercard has taken note that the various implementation divergences among Member States, e.g. the transition period to AMLD5, was the cause of uncertainty in the market which led to inefficiencies in the provision of EU cross border services. We therefore believe that a more harmonised and standardised regulation among EU Member States would increase the ease of doing business and would also ensure a consistent level of compliance throughout the EU area, which would help protect employees and customers.

We are committed to work together with governments to ensure that the AML/CFT framework is effective and equipped for this purpose.

With DORA the European Commission focuses on improving the digital operational resilience of the financial sector in the EU.

Mastercard believes that cybersecurity needs to be enhanced for the benefit of consumers and businesses alike, especially in view of the constantly evolving cyber threat landscape. However, it is crucial for policymakers to carefully identify the areas in which this initiative could add value. This is particularly important, considering the fact that several financial services sectors (including payment systems, payment schemes, and insurance intermediaries) are already covered by a robust regulatory framework aimed at enhancing cyber and information security.

Hence imposing additional regulation in these sectors would lead to unnecessary increase of regulatory burden, as well as conflicting provisions and competences. To that end Mastercard welcomes the European Commission’s approach, according to which payment systems and payment schemes are not going to be subject to the DORA proposal.

Further, Mastercard calls for the exemption of insurance intermediaries from the scope of DORA – at least those whose intermediary insurance, reinsurance and/or ancillary insurance activity is merely an ancillary part of their cares business and which do not provide additional systemically risks.

The regulation that governs digital identity and trust services in the EU – eIDAS – is in the process of being reviewed by the Commission. A revised proposal, that set out the shape and form of eIDAS 2, focuses on the creation of a digital wallet, which consumers can use to access verification-based services.
Mastercard welcomes the Commission’s proposal and is proactively contributing its thinking on how best it might be implemented. Mastercard has a digital identity proposition under development and a live ‘use case’ partnership in place with Evrotrust to support digital identity services in North Macedonia.

Payment cards provide cardholders and retailers, but also society, with tremendous value. A part of that value is generated by the issuers of the cards and for providing that value, Issuers receive a fee every time a card is being used in a shop or online. This transaction fee is called an interchange fee and represents the flow of funds from the retailer’s bank to the cardholder’s bank.

The levels of interchange fees in Europe are largely determined by European legislation.

Mastercard does not charge or benefit from interchange fee.

With the European Elections of 2024 having an important impact on Europe’s future, we at Mastercard have a clear vision to address the main challenges of the EU’s 2024-2029 legislative cycle. With our Manifesto, we suggest 14 recommendations that aim to contribute to building a resilient, prosperous, and liveable Europe while tapping into the full potential of innovative technologies – ultimately improving the lives of European citizens. Our recommendations refer to four key policy priorities: Open Strategic Autonomy, Vibrant Digital European Economy, Innovation Leadership, and Liveable Future.

Mastercard recognizes the importance of the proposed Regulation on Markets in Crypto-Assets (MiCA). It will ensure a robust and competitive European payments market as new forms of assets, services and means of payments emerge in the wake of digitalization.

In preparing for the future of crypto and payments, Mastercard will start supporting select cryptocurrencies directly on our network. The ambition is to help these concepts flourish and reach their potential, while also developing and encouraging the necessary guardrails. We therefore welcome the ambition to provide regulatory clarity and oversight for this market, setting a standard that will provide increased trust in the use of currently unregulated crypto assets.

Mastercard believe that any crypto-assets activity for payments should be supported by a framework that provides strong consumer protection, delivers a level playing field for all stakeholders and operates in full compliance with all applicable laws and regulations.

A card network like Mastercard provides its customers (e.g. issuers and acquirers) with a long range of services and solutions such as ensuring the safety of cards, upholding cyber resilience, as well as rolling out new innovative solutions e.g. contactless payments. All these features are fundamental for issuers and acquirers to provide the benefits of cards that cardholders and retailers expect.

Like any network or franchise Mastercard charges its customers (not cardholders, neither retailers) i.e. issuers and acquirers for the services and value it provides.

At Mastercard, we are working to build a more sustainable and inclusive digital economy for all. We have a multi-faceted approach built upon four pillars: inclusive growth, our people & culture, environmental stewardship and ethical & responsible standards. We have set targets in each of these areas and report our progress aligned with SASB, GRI and WEF reporting standards in our annual sustainability report. We welcome the European Commission’s proposal for a corporate reporting sustainability directive and will monitor the progress in order to determine Mastercard’s participation.

Mastercard believes that the PSD2 directive is a huge milestone in the development of digital finance in Europe, which will shape the payments landscape in a major way in the years to come. As part of the PSD2 package, the European Union has taken a bold step in making electronic payments, and especially those in the online environment, even more secure, paving the way for greater security, greater trust and greater adoption of electronic means of payment throughout the continent.

In the years leading up to the entry into force of the SCA requirements, the entire industry has come together in an unprecedented way and scope in order to jointly create the systems and processes necessary for compliance with the regulation, while also trying to find the most user friendly, forward looking and frictionless solutions.

The PSD2 and RTS do not regulate incidents affecting the 3DS infrastructure. Mastercard has introduced a new resilience flag that acquirers/merchants may include in their authorization requests to inform issuers that SCA was not possible because of a major incident of the authentication network and infrastructure. Mastercard will police that this flag is properly used for major incidents and is implementing a set of limitations and safeguards to this end. We call upon EEA regulators to take action to ensure continuity of payments in the event of a technical incident affecting the EMV 3DS infrastructure. We believe that regulators should temporarily and exceptionally allow transactions to flow until the incident is fixed, with the limitations and safeguards described in our position paper.

Being the operator of a global payment network, Mastercard has taken it upon itself to assume a role of leadership in the process and consider this role to be of major relevance as the work on SCA does not stop with the entry into force of the EBA RTS on SCA, but rather goes beyond it as the industry continues to seek answer to still open questions, and a continuous development and finetuning of the systems and processes is essential to the success of SCA and electronic payments in general.

Mastercard is a long-time champion of a competitive payments market that includes cards, instant payments, cash and other instruments. As new technologies are increasing consumer choice, Mastercard welcomes the European Commission’s initiative for legislating ‘instant euro-denominated credit transfers’ (referred to as ‘instant payments’), which will help to further promote an innovative environment and enhance the payments experience for European consumers.

The Commission proposal strikes a good balance between legislative intervention and the market-driven innovation needed to support open competition and consumer choice. However, we call for a more in-depth consideration around the pricing of instant payments, in particular when taking into account the need for consumer protection measures. This will result in a robust legal framework that earns the trust of all European citizens and provides the industry with a level playing field which encourages continued investment in payments innovation.

Shadow economy is one of the most difficult, yet one of the biggest issues economies in general can face, as it leads to loss of tax revenue, general distrust in the economy, and overall a lower economic output with lower competitiveness. While cash properly used is not a problem, its untraceable nature could enable a shadow economy and studies have repeatedly shown that increasing transparency by way of electronic payments can lead to a significant improvement in tax collection, competitiveness and GDP. For this reason, governments across Europe have been introducing various measures to limit the dominance of cash in their economies and boost the proliferation of electronic payments – especially countries with a large shadow economy and prevalence of cash transactions.

Mastercard believes in transparency and in fair competition, thus we use our expertise and tools to support governments across the globe to fight shadow economy. There are great examples and success stories of good policy and good Public-Private-Partnerships which have led to major improvements in the well-being of economies and societies.

Our proprietary Payments Ecosystem Design & Development (PEDD) methodology helps governments systematically and effectively assess and capture the potential of payment digitization. The PEDD methodology is based on extensive global experience in the payments sector. It helps governments develop a blueprint of their digital economy to mitigate the costs of cash and capitalize on the benefits of a digital economy.

We will continue to lend our support to policy makers and equip them with the necessary tools and insights in their fight against shadow economy