Fresh week, fresh buzz. We sifted the last seven days of payment drama—regulators stalking interchange, card networks flexing new APIs, and yet another country trading POS terminals for QR placards, so you can glide into the morning call sounding like you keep ISO 20022 in your bedside drawer.
1 | Headlines
Brussels sharpens its knives for Visa & Mastercard.
The European Commission widened its antitrust probe on 23 May, firing fresh questionnaires at terminal providers to see if the duopoly’s fee bundles choke competition. So what? A formal Statement of Objections could land this summer, reviving talk of a hard cap on “interregional” card fees.
Visa woos fintech back-end builders.
On 22 May the network rolled out Visa Commercial Integrated Partners, pre-integrating ERP, fleet- and expense-software with Visa APIs to cut months from B2B card launches. So what? Visa is racing Mastercard’s Track and American Express / Coupa to become the default “payments micro-service” inside corporate software.
UPI tightens its bolts after four outages.
NPCI’s 26 May circular forces apps to throttle status-check calls, show the beneficiary’s legal name, and add a four-second review screen before every push payment. So what? Fewer fat-finger misfires and less API spam should keep India’s 14 bn-a-month rail from buckling under peak loads.
Kazakhstan joins the QR club.
The National Bank announced on 22 May that a national QR payment system will launch by end-2025, with all banks mandated to connect in 2026. So what? Central Asia’s cash heavyweight is leap-frogging POS terminals, clearing the path for cross-border QR with China and Russia.
Visa Payments Forum teases “future-proof” rails.
Speaking in San Francisco on 21 May, execs demoed AI-driven dispute prevention, network-level tokenised BNPL, and a card-on-file updater that works across schemes. So what? Visa wants to prove it can do account-to-account-style magic without surrendering the four-party model.
Megabanks toy with a consortium stablecoin.
JPMorgan, Citi, BofA and Wells confirmed exploratory talks about a joint U.S-dollar stablecoin alongside Zelle-operator EWS and The Clearing House. So what? If they green-light the project, banks could reclaim P2P volume leaking to PayPal, Circle and Visa’s upcoming agentic rails.
Visa turbo-charges the back end with Commercial Integrated Partners.
Announced 21 May, ERP and fleet-software vendors can now one-click Visa APIs to spin up B2B cards. So what? Visa is racing Mastercard Track to become the default payments micro-service inside corporate SaaS before FedNow A2A takes that slot.
Mastercard’s 2025 Travel Trends put APAC at the top of the tourist spend table.
Released 23 May, the Economics Institute says Asia-Pac destinations will outgrow Europe for the second summer running. So what? Cross-border acquirers should beef up UnionPay, Alipay+ and VietQR acceptance before the July surge.
Britain’s fintech dream loses altitude.
FT analysis on 27 May shows open-banking “pay by bank” hit just 27 m payments in March versus 1.9 bn card swipes. So what? The UK once set the pace on open banking; its stall gives EU PayNow clones (and card schemes) breathing room.
2 | Deep dive — Europe’s renewed war on card fees
When the European Commission hit “send” on a new batch of questionnaires last Friday, every PSP in the Eurozone felt déjà vu. Brussels has scuffled with Visa and Mastercard for two decades; caps in 2015 tamed domestic fees, but “interregional” charges (e.g., a U.S. card at a Paris café) still sit near 1.5%.
Merchants and acquirers claim those surcharges now make up 20–25% of their card acceptance costs. The Commission wants to know whether:
- terminal vendors must enable the card-scheme rate bundle to get certification;
- fees change too often for merchants to re-price;
- alternative rails (e.g., A2A, pay-by-bank, wallet QR) are being steered away at checkout.
Why the timing matters
- SEPA-for-Cards 2.0. EU lawmakers eye a broader retail-payments law that could force “open routing” between any licensed rail. Fresh evidence of fee pain strengthens their hand.
- Retail CBDC diplomacy. The ECB’s digital-euro road map needs merchants on-side; squeezing card costs burnishes the Bank’s “public option” argument.
- Visa–Mastercard MIF déjà vu. In 2007 Brussels killed MasterCard’s cross-border interchange; a reprise could see caps plunge from ~150 bp to the domestic 30 / 20 bp level.
What could happen next?
If responses confirm fee stasis and compulsory bundles, expect a Statement of Objections in Q4 and an offer from the schemes to slash interregional interchange by at least 40%. For wallets, A2A and private-stablecoin players, lower swipe fees dim one of their sharpest selling points; for Visa and Mastercard, it’s another reminder that Brussels never forgets.
3 | Word of the week — MIF (Multilateral Interchange Fee)
At first glance the MIF is just a wholesale clearing toll: every time you tap a card, your acquirer wires a slice of the sale to the issuer, typically 0.10–1.50% depending on jurisdiction, card type and where the buyer and seller sit. But that tiny toll does three heavyweight jobs at once:
- Risk insurance. It bankrolls fraud write-offs and chargebacks. Cap it too hard and issuers either gut fraud guarantees (hello, liability shift) or jack up annual fees and lending spreads.
- Rewards flywheel. Cash-back, airline miles and Metal-card “ooh shiny” perks are funded almost entirely from MIF revenue. Every basis-point Bruxelles lops off shows up as thinner points or higher APRs.
- Network diplomacy. Because the MIF is set by the schemes—not regulators—Visa and Mastercard can tweak it corridor-by-corridor to shepherd volume toward markets they want to seed (e.g., QR-light Africa) or trenches they want to defend (e.g., luxury travel).
Numbers to drop in a meeting
| Region | Domestic cap | Cross-border (“inter-regional”) | Last big cut |
|---|---|---|---|
| EU | 0.20% debit / 0.30% credit | ~1.15% (Visa), ~1.50% (MC) | 2015 (Reg 2015/751) |
| India | 0.00% on RuPay debit < ₹2 000 | 0.50% (MC/Visa debit) | 2020 (MDR zeroed for small RuPay tx) |
| Australia | 0.10 – 0.20% weighted average | 0.80% default | 2003 (RBA reforms) |
What happens if Brussels’ fresh probe slashes the EU’s inter-regional MIF? History hints at two pivots: issuers double-down on lending to replace lost fee income, and schemes invent new products (tokenisation fees, value-added APIs) that sit outside the cap. The chess match never ends—only the board changes.
4 | Payment fact of the week — The 1.95% spark that lit a trillion-dollar industry
June 1971, San Mateo, California. Dee Hock, freshly appointed CEO of the nascent BankAmericard Association, gathers 15 bankers in a Holiday Inn ballroom. Their problem: merchants hate unpredictable “discount” rates, and banks are swallowing fraud losses from each other with every mailed-in sales slip. Hock’s answer is equal parts genius and guesswork:
“We’ll standardise a 1.95% interchange. Acquirers pay it to issuers. It’ll fund fraud, processing, even a little cardholder credit grace. Everyone lives with the same toll, and merchants get a uniform rate.”
Why it stuck
- Simple maths beats haggling. Merchants finally knew the fee before swiping; acquirers could price around a constant.
- Cash advances without chaos. Issuers had a revenue stream to float 30-day interest-free periods—turning cards from charge plates into mini-credit lines.
- Copy-and-paste scalability. When Master Charge (later Mastercard) saw issuers defecting to the predictable BankAmericard model, it cloned the 1.95% fee almost verbatim.
How the spark travelled
1976 → Visa launches in Europe with the same fee logic.
1984 → Australia adopts interchange; Reserve Bank of Australia starts tracking merchant costs.
1991 → Brazil’s Redecard and Visanet (now Cielo) bring the model to Latin America.
2003 → Australia becomes the first regulator to slash interchange (0.95% → 0.55% weighted), triggering global copy-cats.
Legacy today
Even after a half-century of regulation, interchange still funnels roughly US $75 billion a year from merchants to issuers worldwide—fuel for fraud insurance, loyalty schemes and, increasingly, BNPL rails that piggy-back the four-party model. Whenever regulators shave another basis point, they’re negotiating with the ghost of that 1971 Holiday Inn meeting.
Take-home sound-bite: “Every tap you make still pays tribute to a two-percent fee dreamed up over stale coffee in ’71—no wonder Brussels keeps sharpening its scalpel.”
Pass this on to three payments nerds and stack some mythical “MIF karma.” It won’t lower your interchange (yet)—but neither will another webinar.