TY - JOUR
AU - Roaidi, Ali
AB - Abstract One of the key success factors of the regulatory involvement by the European Commission (EC) in card payment markets across Europe is the reduction of merchant service charges for retailers and final prices for goods and services for consumers. In light of the EC’s scheduled review of the impacts of the policy intervention, this paper evaluates the usability of the event study analysis to determine the impacts of the interchange fee regulation. Findings show that 1 April 2009 is the single, statistically significant date in relation to the regulation. Contrary to common rationale, positive excess returns are recorded for issuers (9 percent-pts), pure issuers (9 percent-pts), and merchants (4.8 percent-pts), primarily driven by previous uncertainty of investors around a potential ban on interchange fees. As a consequence, total market capitalization for the retail industry increased by 11.2 billion Euro. This results in a partial pass-through rate of 46 percent from acquirers to merchants. The event study is deemed a suitable methodology to complement existing research techniques in this field. To determine ultimate pass-through to consumers, further investigation on the prevalent manifestation of issuer–acquirers needs to be conducted. I. INTRODUCTION After more than three decades of research and legal cases pursued by the European Commission (EC) and national regulators, interchange fees for four-party consumer card transactions are capped1 on 9 December 2015 across the European Union (EU).2 In their proposal3 the EC outlines several market observations that underline the necessity of a regulatory involvement, which at the point in time is already being adopted domestically in several European markets (Poland, Hungary, Italy, and United Kingdom among others). In parallel, national competition authorities pursue on-going antitrust law enforcement proceedings related to the matter in countries such as Germany, Italy, and United Kingdom. The overarching goal is the development of an EU-wide market for (card) payment transactions. This is to be achieved by five core measures, which are (1) the enablement of consumers and retailers4 to attain accurate information on fees paid in relation to payment transactions thereby avoiding inefficient prices and subsequently (2) allowing retailers and consumers to make better informed choices of payment instruments. (3) The facilitation of EU-wide pricing strategies of retailers for products and services; (4) the promotion of efficiency and innovation in the field of card payments to foster integrated, EU-wide services by reducing entry barriers (high interchange fees), ultimately leading to (5) a reduction of merchant service charges and a subsequent reduction in final prices for goods and services for consumers. Article 17 of the interchange fee regulation (IFR)5 requires the EC to submit a report on its application, examining in particular the appropriateness of the levels of interchange fees and steering mechanisms.6 In particular the report shall assess the regulation’s technical, economical, and legal effects on five core areas.7 First, the development and interrelation of fees and costs for cardholders and retailers are to be assessed. Findings8 show that card issuers suffered immediate revenue losses of several billion Euro. Confirmatory, empirical evidence can also be found in economic literature.9 In their Study on the application of the Interchange Fee Regulation, the EC finds that issuer losses resulting directly from the regulation accumulated to 2.7 billion Euro, albeit acknowledging that this figure may be understated due to the fact that some countries had already reduced interchange fees prior to the benchmark year of 2015.10 How these funds have been redistributed across the payment chain, in particular between acquirers, retailers, and consumers remains to be addressed. Second, the sector evolution, including competition between issuers and card associations, is to be reviewed. Research shows confirmatory evidence of a statistical relationship between intra- and inter-system concentration and the pre-regulated setting of interchange fees as well as a post-regulatory market consolidation within the payments industry.11Contrary to its previous findings and the prevalent assumption within the research community, the EC also finds that acquirer markets are more (and in most cases highly) concentrated than issuer markets, which are characterized by a moderate degree of concentration.12 Third, revenues for card associations and card issuers are to be addressed. While the immediate monetary impact on issuers has been addressed above, there is a continuous claim that due to an increase in merchant card acceptance and an extraordinary volume growth driven by a changing payment behaviour, these losses will be (at least partially) offset.13 To compensate for above losses, card issuers across the EU would need to process 80 percent more debit and credit card volume. Given that card payment markets have historically grown at an average of 9 percent following previous interchange reductions, it seems highly unlikely that such a growth in card acceptance is achievable in the short to mid-term.14 The real value of total card payments increased at an average rate of 7 percent from 2015 to 2018.15 Further, research suggests that payment habits tend to dictate consumer behaviour rather than fees of payment instruments.16 Opposingly, findings show revenue and profitability increases for the two card associations Visa and Mastercard,17 partially driven by increasing card scheme fees across Europe since the implementation of the IFR.18 The EC provides confirmatory evidence on these findings. For one, card payment markets did not grow (post-IFR) in a statistically significant manner in terms of volumes, card issuance, or card acceptance. For the other, card association revenues stemming primarily from scheme fees have substantially increased by 550 million Euro, although findings do not suggest a compensation of interchange fee losses via increased (decreased) acquirer (issuer) scheme fees.19 Fourth, the use of commercial cards and relating surcharges is to be analysed. An increased issuance and the steering of consumers towards nonregulated (exempted) cards have been observed20 and publicly addressed.21 While there is no evidence of a significant change in costs for processing applied to commercial cards, the EC finds that there has been an increase in both the issuing and use of commercial cards since the IFR entered into force.22 Finally, an assessment of merchant pass-through of fee reductions (from acquirers to retailers and ultimately consumers) is to be performed. Given the relatively complex structure of card payment networks, this question remains to be addressed in economic literature and policy debates. Thus far, the research community and policy regulators have primarily relied on two methodologies to address merchant pass-through within card payment markets.23 One frequently utilized method are questionnaires and in-depth interviews. However, these are prone to error as their results are highly subjective and in general do not provide a measure of materiality. Acquirers have an interest to showcase higher (rather than lower) pass-through rates towards merchants to avoid further regulatory involvement.24 Merchants have an interest in capping card scheme fees, thereby reducing overall merchant service charges (MSC)25 while being able to demonstrate social benefits stemming from consumer price reductions.26 Also, given the interrelatedness of merchant product pricing with a multitude of other internal and external factors, an assessment of pass-through towards consumers becomes highly speculative and is often too complex to conduct. Card payment costs are only one of numerous cost components to merchants while they are the core revenue stream for acquirers. An alternative methodology is the usage of proxies, thereby estimating the elasticity of pass-through, that is, how much retail prices change in response to merchants’ cost savings27 and applying these across the industry. However, only limited research exists on this subject and results can strongly vary across time, sector, or region, making its usability questionable. Within card payment networks, an inherent difficulty exists around measuring retailer pass-through towards consumers. Once we depart from perfect competition and constant returns to scale, pass-through becomes an empirical question.28 This paper aims to address the lack of empirical research with regard to pass-through (in particular from acquirers to retailers and subsequently consumers) within cooperative card payment networks across Europe. An event study is performed to assess the impacts of the European IFR. Results shall (1) determine the usability of event study analysis to complement existing methodologies when addressing pass-through, (2) provide empirical evidence of the re-distribution of funds and enable an evaluation if cost savings have been passed on to merchants and consumers through lower prices, thereby achieving one of the fundamental goals of the regulation, and (3) support the EC’s assessment29 of the regulatory impacts on fees and costs of card payment processing. The paper is organized as follows. First, an overview of the economics of four-party card payment markets will be provided, followed by a review of the event study methodology and its application across the United States and Europe. The data sourcing process and ultimate data set, including selection of key event dates will be described in Section 4. The technical and statistical background of the performed event study will be introduced in Section 5. Section 6 presents the results of the study with regard to the European IFR. Section 7 discusses key findings in relation to pass-through with a holistic view of European payment markets. A final section concludes. II. ECONOMICS OF FOUR-PARTY CARD PAYMENT NETWORKS Card payment markets can be classified as networks and as such exhibit network externalities.30 They are set up as two-sided markets, as they bring together two groups of end users, namely merchants and cardholders.31 By setting a balancing price, the platform can effectively cross-subsidize between the parties and influence overall performance. This balancing price is not only a mechanism to favour one side over the other but also an essential tool to bring the two sides together as the network can only function if these interact simultaneously.32 Baxter was first to conceptualize the economics within four-party payment systems.33 The interchange fee is described as an efficient balancing mechanism for equilibrating cooperative payment markets compared with a complete set of bilaterally negotiated agreements. The price determination of interchange fees is dependent on the price elasticities of the parties involved. It is set to maximize the profit of the network participants and represents a socially efficient way to recover and allocate common costs.34 The more intense the competition on either side of the system, the less sensitive the unit mark up on that side of the system to changes in the interchange fee will be.35 The price charged by one side of the platform towards the other depends on what the other side is willing and or able to bear, whereby the price is inversely related to the other side’s elasticity of demand.36 The price structure is generally set to favour cardholders over merchants. Costs are allocated disproportionately due to the lower price elasticity on merchants’ side,37 mainly driven by the fact that there is an element of must-take (cards) in today’s payment environment.38 Issuing banks’ profits and competition for cardholders increase with interchange fees. Issuing banks compete for consumers via services such as rewards, cash-back programmes or air miles, by which consumers are incentivized even more to utilize card payments. This reward on top of the convenience benefit of using cards further negatively influences merchant’s price elasticity and the ability to turn card payments down.39 Figure 1 shows the flow of payments (bold arrows) within a four-party card network. Cost savings and potential pass-through of these flow in the opposite direction (non-bold arrows). Assuming regulatory compliance, interchange fee savings would be passed on from issuers fully to acquirers. The subsequent pass-through by acquirers to merchants and finally consumers (dotted arrows) is dependent on a multitude of factors and can range between 0 percent and 100 percent. Figure 1 Open in new tabDownload slide Flow of payments and savings within a four-party card network. Figure 1 Open in new tabDownload slide Flow of payments and savings within a four-party card network. Card associations such as Visa or Mastercard are in charge of setting the interchange fee, whereby the maximum weighted average charges for consumer cards have been determined by national legislation and governments.40 While competing for partnerships with issuing banks, both card associations are inclined to increase benefits towards issuers. With increasing competition, interchange fees will rise, causing costs of card processing to increase for merchants. Thus, scheme competition can in fact increase (rather than decrease, as would be the common rationale with most industries) consumer prices.41 Issuing (cardholders) and acquiring (merchants) banks each represent one side of the market and are charged scheme fees as part of the network participation. Equally, consumers and merchants pay a fee for the services provided by their respective banks. Let us assume a consumer purchases goods worth 100 Euro in the EU and settles the transaction with a domestic, consumer credit card. While the consumer would be charged 100 Euro, the merchant would receive a net amount, after the deduction of the MSC. The MSC itself consists of three major components, namely interchange fees (0.30 percent),42 scheme fees (0.15 percent)43 , and an acquirer processing fee (0.06 percent)44 , amounting to a total of 0.51 Euro, of which 0.30 Euro would be paid to the issuing bank, which itself would need to deduct a fraction to settle the issuer scheme fees. The other two components, that is, 0.15 Euro and 0.06 Euro, respectively, are attributed to the card association in form of acquirer scheme fees and to the acquiring bank for the provisioning of card payments. If the interchange fee is reduced to 0.20 percent, the acquirer would immediately recognize these cost reductions as additional profits, while the MSC towards the merchant may (partially) or may not be amended. Without any changes, the differential of 10 basis points would be fully recognized as additional profit by the acquirer. In contrary, if savings were fully passed-through to merchants, one needs to assess as to what degree and when these savings may (partially) or may not be passed on to consumers in form of price reductions. Thus, from the perspective of acquirers, a decrease in interchange fees will lead to a decrease in their costs and ultimately in the MSC. This will apply in a scenario with a single or with multiple acquirers, although the pass-through rate will depend upon competition within the segment. If pass-through is less than perfect, the decreased interchange fee will result in additional acquirer profits. Similarly, from the perspective of issuers, a decrease in interchange fees will immediately decrease issuer profits and ultimately lead to a decrease in benefits or services towards cardholders. This will occur in a scenario with a single or with multiple issuers, whereby the cost impact will depend on the degree of competition.45 In addition, two noteworthy characteristics of the European card payments market add a further layer of complexity to the determination of pass-through rates among the network participants. The first is an evident and increasing acquirer market consolidation driven by merger and acquisition (M&A) activity (particularly in a post-regulatory environment), and the second is the widespread manifestation of issuer–acquirers across Europe.46 Issuer–acquirers act (often simultaneously) on both sides of the network, making a clear distinction of interests, strategies, and in particular financial impacts very difficult. III. APPLICATION OF EVENT STUDY METHODOLOGY Event studies measure the financial effect of a given economic event on the value of a firm. Using financial market data, an event study can assess the impacts of an announcement or occurrence within the marketplace on security prices. The methodology dates back as far as 1933,47 with the most prominent piece of research being published in 1969,48 whereby the methodology deployed today remains essentially the same. It is based on the notion of (semi-strong) market efficiency49 at least with respect to publicly available information and several fairly unrealistic statistical notions such as individual abnormal returns being independent of each other and identically distributed, most of which can however be relatively easily solved for.50 Event studies have seen a vast range of applications, ranging from mergers and acquisitions, earnings, or macro-economic announcements to legal (liability) and regulatory cases. While the methodology is implicitly accepted by the U.S. Supreme Court, it has its limitations, especially related to regulatory changes as these are often debated in the political arena over time, whereby accompanying monetary effects will be gradually incorporated into security prices. Thus, insignificant results can often be attributed to the absence of distinct event dates.51 Due to their widespread acceptability, the existence of operational standards, the known rate of error, the ability to test hypotheses and the ability to determine any event study’s admissibility as the basis for expert testimony based on the Daubert guidelines, event studies are regarded as a highly objective methodology for calculating the magnitude of damages and the materiality of an event in U.S. courts. Compared with other methods of calculating financial impacts, which tend to be based on an idiosyncratic viewpoint, the measurement of security prices has the benefit of being based on numbers, which, being determined by the collective decisions of all investors in the market, are both objective and present a consensus. Notwithstanding bubbles, volatility, and irrational exuberance, in a market economy market value (discounted present value of future cash flows) will always be the primary metric of a firm’s worth.52 In Europe, the event study analysis is not as prominently utilized as in the United States; however, there are vast examples where it has been applied in research53 and legal cases.54 Its primary advantage over alternative procedures is the fact that it can indicate causality (cause–effect) with a statistical probability55 , thereby quantifying the risk of interplay of confounding factors. In general, all event studies tend to follow a similar approach. First, the data sample is defined, including event (date), securities to be analysed, and news sources. From this, confounding events are excluded to control for systemic bias. The final event list with asset price data is collated and the methodology for calculating (average and abnormal) returns is defined. Finally, the estimation and event windows are determined and the analysis run. A subsequent test for statistical significance is performed. IV. DATA The regulation of interchange fees for card-based payment transactions56 was adopted on 29 April 2015, after a procedural process that was conducted in five stages, beginning with a consultation on 11 January 2012.57 The regulation was preceded by five antitrust cases brought forward by the EC against Visa and Mastercard58 on the basis of Article 101 (1) Treaty on the Functioning of the European Union (TFEU)59 , with the initial accusation of anticompetitive behaviour (EU against Visa) dating back to 16 October 2000.60 These antitrust procedures did not follow the classical investigation process of cartels or other anticompetitive behaviour, whereby surprise inspections or so-called dawn raids would occur and cause immediate public reactions;61 rather they have been transparently debated in multiinstance courts with opposing decisions being made on different occasions. Further, they have been pursued against the card associations, which were initially formed as member-owned (by acquiring and issuing banks) organizations in the 1960s and subsequently privatized: Mastercard, Inc. in 2006 and Visa, Inc. in 2008.62 Finally, the interchange fee is a revenue stream towards issuers, rather than card associations. This adds a further level of complexity with regard to monetary impacts on securities and public interpretation. In order to control for the risk of unrecognized, distinct event dates and the influence of confounding factors, the regulation is decomposed into separate procedural stages that have taken place in the political arena over the course of 15 years. Confounding events include any occurrences, which may have had an influence on security prices. These can range from capital events (stock splits and structural changes), damage suits and earnings announcements to dividend and executive changes.63 Initially, all event dates are recorded that have a (in-)direct link to any antitrust investigations against Visa and Mastercard related to domestic and cross-border/ Intra-EEA interchange fees. These (24 events) range from 16 October 2000 and the initial accusation of anticompetitive behaviour against Visa to 9 December 2015 when the regulation formally entered into force. Subsequently, seven key events are selected based on pre-defined criteria64 and analysed separately via event studies in order to detect even minor monetary effects that may have had a gradual and/ or phased impact on security prices (see Table 1. Event dates). The selected event dates are searched for confounding events that may have had an influence on results; none are identified.65 The respective weekdays are matched with the event dates. In cases where the information release occurred outside of bank working hours, the subsequent working day is considered. Several dates have been omitted based on selection criteria such as relevance or information contained. Also, each event is documented with the respective media coverage at the time, ranging from globally recognized information sources such as The Wall Street Journal (WSJ), Financial Times (FT), Reuters, and CNBC to Finextra, which is a news portal focusing on financial technology and the official website of the EC. Table 1 Event dates Event date . Background . 12 June 2008 Mastercard temporarily repeals its cross-border interchange fees, that is, sets these to 0% after litigation by EC. 01 April 2009 Interim agreement between Mastercard and EC that cross-border interchange fees will be reduced to 0.3% for credit and 0.2% for debit cards as part of litigation process. 26 April 2010 Visa agrees to trial the EC proposal on interchange fees and reduces these to 0.2% for domestic and cross-border debit transactions after litigation by EC. 08 December 2010 EC makes Visa’s commitments to cut interchange fees for debit cards legally binding as part of litigation process. 31 July 2012 Antitrust complaint by EC regarding Visa’s domestic and cross-border credit card fees. Expectations are that these will be reduced to 0.3%. 17 July 2013 24 July 2013 EC proposal for a regulation of domestic and cross-border interchange fees for debit (0.2%) and credit (0.3%) card payments across Europe. 03 April 2014 Amendments on proposed regulation adopted by European Parliament. Event date . Background . 12 June 2008 Mastercard temporarily repeals its cross-border interchange fees, that is, sets these to 0% after litigation by EC. 01 April 2009 Interim agreement between Mastercard and EC that cross-border interchange fees will be reduced to 0.3% for credit and 0.2% for debit cards as part of litigation process. 26 April 2010 Visa agrees to trial the EC proposal on interchange fees and reduces these to 0.2% for domestic and cross-border debit transactions after litigation by EC. 08 December 2010 EC makes Visa’s commitments to cut interchange fees for debit cards legally binding as part of litigation process. 31 July 2012 Antitrust complaint by EC regarding Visa’s domestic and cross-border credit card fees. Expectations are that these will be reduced to 0.3%. 17 July 2013 24 July 2013 EC proposal for a regulation of domestic and cross-border interchange fees for debit (0.2%) and credit (0.3%) card payments across Europe. 03 April 2014 Amendments on proposed regulation adopted by European Parliament. Open in new tab Table 1 Event dates Event date . Background . 12 June 2008 Mastercard temporarily repeals its cross-border interchange fees, that is, sets these to 0% after litigation by EC. 01 April 2009 Interim agreement between Mastercard and EC that cross-border interchange fees will be reduced to 0.3% for credit and 0.2% for debit cards as part of litigation process. 26 April 2010 Visa agrees to trial the EC proposal on interchange fees and reduces these to 0.2% for domestic and cross-border debit transactions after litigation by EC. 08 December 2010 EC makes Visa’s commitments to cut interchange fees for debit cards legally binding as part of litigation process. 31 July 2012 Antitrust complaint by EC regarding Visa’s domestic and cross-border credit card fees. Expectations are that these will be reduced to 0.3%. 17 July 2013 24 July 2013 EC proposal for a regulation of domestic and cross-border interchange fees for debit (0.2%) and credit (0.3%) card payments across Europe. 03 April 2014 Amendments on proposed regulation adopted by European Parliament. Event date . Background . 12 June 2008 Mastercard temporarily repeals its cross-border interchange fees, that is, sets these to 0% after litigation by EC. 01 April 2009 Interim agreement between Mastercard and EC that cross-border interchange fees will be reduced to 0.3% for credit and 0.2% for debit cards as part of litigation process. 26 April 2010 Visa agrees to trial the EC proposal on interchange fees and reduces these to 0.2% for domestic and cross-border debit transactions after litigation by EC. 08 December 2010 EC makes Visa’s commitments to cut interchange fees for debit cards legally binding as part of litigation process. 31 July 2012 Antitrust complaint by EC regarding Visa’s domestic and cross-border credit card fees. Expectations are that these will be reduced to 0.3%. 17 July 2013 24 July 2013 EC proposal for a regulation of domestic and cross-border interchange fees for debit (0.2%) and credit (0.3%) card payments across Europe. 03 April 2014 Amendments on proposed regulation adopted by European Parliament. Open in new tab Across Europe a total of 21 retailers (with a market capitalization of 568 billion Euro), 43 issuers (811 billion Euro) and 16 extracted pure issuing banks (315 billion Euro) are identified and included in the data set.66 The largest European issuing (by number of issued cards) and acquiring (by processed card volume) banks across Europe are identified via the Nilson report.67 The set is enhanced with proprietary data from a market intelligence firm providing financial and economic research services.68 The initial data set contained a total number of 230 issuers and 375 acquirers, most of which are excluded due to private ownership, change of legal entity, or engagement in M&A activity during researched time frame. The largest European retailers are selected by retail revenue.69 From a total of 250 largest retailing firms across the globe, only 21 public retailers, domiciled in Europe are included in the data set, due to similar complexities. The majority of companies are excluded due to private ownership, merchants engaging primarily in business-to-business activities (and thus not seeing extraordinary impacts from the regulation; see Nestlé as an example), or being part of M&A activity over the considered time span and lacking data due to changes of entity or legal form. A separate analysis of acquirers is neglected as less than five acquirers are identified across Europe that are publicly listed and have no engagement in card issuing. The relevant data in form of daily stock returns (closing prices) is collected from 2 January 2008 to 31 December 2015 from Yahoo Finance.70 As a market proxy the EURO STOXX 50 index is selected, covering the 50 largest stocks from 11 Eurozone countries.71 The data quality is assessed, whereby any missing values and outliers are replaced by their mean (average). The interquartile range method is applied to detect outliers. V. ECONOMETRIC MODEL The selected event window |$[t_1,t_2]$| ranges |$\pm 1$| days around the event day (see Figure 2).72 Selecting a short-horizon event window has the advantage of focusing on the informative content of the event while allowing for leakage of information prior to the event and slightly belated responses after the event.73 Information overflow can occur due to insider information and investor reactions can be the result of a developmental process depending on the time of issuance of the announcement and their interpretation. In line with prevailing theory for event studies dealing with daily data, the estimation window |$[T_1,T_2]$| has a range of one year (ca. 250 trading days) prior to the event window, starting one year before the event and ending one day before the event window or in our case two days before the event date.74 The actual length of the estimation windows may vary by a few days depending on the availability of data within the sample. In accordance with prevailing theory, the estimation and event window do not overlap. This is to avoid a potentially disproportionate influence of the event returns on the normal return measure, which could detrimentally impact the significance and explanatory power of the model.75 Figure 2 Open in new tabDownload slide Estimation and event windows. Figure 2 Open in new tabDownload slide Estimation and event windows. In order to determine the effect of the announcements on security prices, an estimation method for the calculation of expected returns needs to be determined. This paper captures the relationship between the return on individual stocks and the expected return on the market portfolio |$\mathrm{R}_{it}$| using the ordinary least squares (OLS) market model76 based on the mathematical approach of Brown and Warner.77 The null hypothesis to be tested is that the mean abnormal return for the event day is statistically equal to zero. $$\begin{equation*} H_{0}: \ \bar A_{t_0} \ = \ 0\end{equation*}$$ Rejecting the null hypothesis would suggest that the event had an abnormal effect on returns to shareholders for the selected group of companies, that is, issuers, pure issuers, and retailers. In this case, a further analysis is conducted to determine causality and assess the magnitude of the impact. To assess the statistical significance of the abnormal return |$A_{t_0}$| a test statistic is run as the ratio of |${t_0}$| mean abnormal returns to its estimated standard deviation, whereby the standard deviation is estimated from the time series of mean abnormal returns. An advantage of using test statistic to make inferences on the statistical significance of the abnormal return is that in short-window event methods it is not highly sensitive to the benchmark model of abnormal returns or other assumptions regarding the cross-sectional or time-series dependence of abnormal returns.78 Findings show that for tests using daily returns no significant impact is observable when correcting for cross-correlation and auto-correlation; rather higher explanatory power can be achieved when ignoring cross-sectional dependence than when running test statistics, which account for potential dependence.79 The critical t-test value for a two-tailed statistical significance with a confidence level of 95 percent is 1.96. In order to control for the effects of heteroskedasticity on inference, a heteroskedasticity-consistent standard error estimator of OLS parameter estimates is implemented. This approach allows for the regression model to be estimated using OLS, as an alternative method of estimating standard errors is employed, one that does not assume homoskedasticity.80 VI. RESULTS Based on the seven key event dates analysed, the (interim) agreement between Mastercard and the EC to reduce cross-border interchange fees to 0.3 percent for credit and 0.2 percent for debit cards on 1 April 2009 is the only significant event. The t-test values range from 4.9 to 8, allowing for the classification of this event as statistically significant at a confidence level of 99 percent. While it is possible to state with a very large certainty that the results are not caused by chance, the rejection of the null hypothesis does not allow for an ultimate conclusion that the findings may not be driven by other (unknown) factors, as this risk is prevalent in any form of event study. The average (three-day cumulative) abnormal returns for 2 April 2009 range from 4.8 percent-pts (7 percent-pts) for retailers to 9 percent-pts (18 percent-pts) for issuers and 9 percent-pts (18.2 percent-pts) for pure issuers, while for all other considered event dates the average abnormal returns (AAR) never surpass |$\pm 3.2$| percent-pts and t-values do not surpass |$\pm 2.9$|⁠. Below, Table 2 shows the results for the three-day event window. A complete set of results can be found within Table A2 in the Appendix. Figure 3 shows the development of returns for a 30-day (-15 to +15 days) window surrounding the event.81 Table 2 Results of event study for statistically significant event . Retailers . Issuers . Pure Issuers . Date . AAR . CAAR . t-test . AAR . CAAR . t-test . AAR . CAAR . t-test . 2009-03-31 0.005 0.005 0.551 0.044 0.044 3.901 0.054 0.054 4.557 2009-04-01 0.016 0.021 1.612 0.037 0.082 3.250 0.029 0.084 2.414 2009-04-02 0.048 0.070 4.937 0.090 0.180 7.990 0.090 0.182 7.647 . Retailers . Issuers . Pure Issuers . Date . AAR . CAAR . t-test . AAR . CAAR . t-test . AAR . CAAR . t-test . 2009-03-31 0.005 0.005 0.551 0.044 0.044 3.901 0.054 0.054 4.557 2009-04-01 0.016 0.021 1.612 0.037 0.082 3.250 0.029 0.084 2.414 2009-04-02 0.048 0.070 4.937 0.090 0.180 7.990 0.090 0.182 7.647 Open in new tab Table 2 Results of event study for statistically significant event . Retailers . Issuers . Pure Issuers . Date . AAR . CAAR . t-test . AAR . CAAR . t-test . AAR . CAAR . t-test . 2009-03-31 0.005 0.005 0.551 0.044 0.044 3.901 0.054 0.054 4.557 2009-04-01 0.016 0.021 1.612 0.037 0.082 3.250 0.029 0.084 2.414 2009-04-02 0.048 0.070 4.937 0.090 0.180 7.990 0.090 0.182 7.647 . Retailers . Issuers . Pure Issuers . Date . AAR . CAAR . t-test . AAR . CAAR . t-test . AAR . CAAR . t-test . 2009-03-31 0.005 0.005 0.551 0.044 0.044 3.901 0.054 0.054 4.557 2009-04-01 0.016 0.021 1.612 0.037 0.082 3.250 0.029 0.084 2.414 2009-04-02 0.048 0.070 4.937 0.090 0.180 7.990 0.090 0.182 7.647 Open in new tab Figure 3 Open in new tabDownload slide Development of CAAR over a 30-day window surrounding the event date. Figure 3 Open in new tabDownload slide Development of CAAR over a 30-day window surrounding the event date. Assuming rational investor behaviour, this study uses stock returns as a proxy for future profits. These are suitable indicators to determine if and how markets reacted to the implementation of the IFR. Taking no (NPT), full (FPT) and partial (PPT) pass-through into consideration, seven possible post-event scenarios can have occurred, only one of which would have seen no impact on downstream security prices (full pass-through by both acquiring banks and retailers), coincidentally the one which would also represent the most desired outcome from a regulatory perspective. The possible scenarios are depicted in Figure 4.82 For the sake of completeness, a possible pass-through from issuers to cardholders is also noteworthy, resulting in two ultimate impacts to the consumer through changes in card fees and/ or benefits and prices of goods. Full pass-through and the complete absence of pass-through are based on the notion of perfect versus non-existent competition and can be characterized as theoretical concepts in economic research, rather than observable occurrences in the markets. While a separate, mathematical calculation of pass-through for each of the market participants is not feasible, primarily due to the lack of results for acquiring banks, we find that the regulatory announcement has been positively interpreted by retail investors, leading to a total, industry-wide83 increase in market capitalization by 11.2 billion Euro (or 3.6 percent) on the event date. Correspondingly, an increase in market capitalization by 39.7 billion Euro (or 8.5 percent) for selected issuers and 14.8 billion Euro (or 8.9 percent) for pure issuers within the data set can also be recorded.84 An abolishment of interchange fees across Europe in 2009 would have resulted in immediate issuer losses of 8.8 billion Euro85 or a decrease in net present value (NPV) of ca. 46 billion Euro.86 An agreement to set interchange fees at current levels would have resulted in an unexpected and immediate uplift of 4.2 billion Euro in revenues or an increase in NPV of 22 billion Euro (for simplicity, based on the same calculation method as above).87 For acquiring banks, this consensus (disregarding any previous expectations), results in savings of 4.7 billion Euro or an increase in NPV of 24 billion Euro. Given the 11.2 billion Euro increase in market capitalization by retailers and disregarding any potential and subsequent consumer pass-through, an acquirer-to-merchant pass-through of 46 percent is suggested. Disregarding increases in acquirer scheme fees, the EC determines a pass-through rate of 45 percent towards merchants for the three-year period between 2015 and 2017. Thus, consumer benefits directly related to the IFR can be determined between 0 and 12.8 billion Euro, depending on the competition within the acquiring and retail sectors, notwithstanding any negative impacts being passed-through on the issuing side of the network.88 Figure 4 Open in new tabDownload slide Possible post-event pass-through scenarios. Figure 4 Open in new tabDownload slide Possible post-event pass-through scenarios. VII. DISCUSSION To the untrained eye, the results of this event study analysis may seem to lack causality. While they are statistically significant, the observation of increasing security prices for all network participants does not visibly align with common rationale,89 nor with comparable research utilizing this methodology.90 However, when reviewing the historical developments leading up to the event, as well as the legal background and complexities related to European card payment markets, a logical and coherent conclusion can be drawn. On 9 August 2001 the last decision was made with regard to case Visa International (29373). Albeit stemming from agreements between undertakings, that result in a distortion of competition, interchange fees are exempted under Article 101(3) TFEU on the basis that no alternative, less restrictive arrangement can be identified that would achieve similar advantages and benefits to consumers. Subsequently three further antitrust cases against Visa and Mastercard are decided over the course of six months, from October 2007 to March 2008. All of the cases find that interchange fees indeed distort competition, contrary to the initial finding; however, no exemption is granted under Article 101 (3) TFEU.91 From this transition in interpreting the role and legitimacy of interchange fees, we can derive the first compelling argument in favour of our findings. Between October 2007 and March 2008, three legal cases (37860, 34579, and 39398) found that interchange fees constituted an infringement of Article 101 (3) TFEU. While accepting an issuer cost methodology as a benchmark for compliant interchange fees initially, the EC disallowed the approach in 2007 and embraced a new and untested methodology to assess the legal matter, the tourist test or merchant indifference test. This methodology is said to have been used as a benchmark during the interim agreement on interchange fees between Mastercard and the EC in April 2009. For this, the EC also awarded a study to obtain relevant date for its undertaking in 2009.92 The agreement on interchange fees from April 2009 is therefore based on the very same methodology that the EC based their regulatory proposal on, one that was already publicly known at the time and applied to determine compliant interchange rates four years before the first regulatory proposal by the EC. During the time span between the initial and the last three decisions, numerous charges, objections, and litigations by the EC against the card associations are reported in the media; some of which are listed in Table A1 within the Appendix. These include reports of a potential ban of interchange fees,93 culminating in Mastercard’s decision to repeal its cross-border interchange fees in 2008, which also set the minimum fee levels for domestic transactions in several European countries.94 The EC’s response95 to the Mastercard decision reads as follows: “Irrespective of MasterCard’s move to temporarily repeal its cross-border MIF, the Commission will continue to be open to assess any new proposals from MasterCard concerning systems to ensure both efficient payments and a fair share of the benefits for consumers and retailers.” At this point an evident shift in the argumentation and negotiation regarding interchange fees in Europe is observable. From the stance that interchange fees are in fact the best (albeit anticompetitive) solution to solving network externalities within card payment markets, to the finding that these do not meet the exemption criteria under Article 101 (3) TFEU and shall, as such, be abolished and finally, just as they are repealed, the willingness of regulators to assess an efficient and fair proposal. Also, a transition from solely reviewing cross-border interchange fees to include domestic fees in line with the ambition of creating a single European payments market, is noticeable. It would be fair to assume that investor insecurity had built up during this course of events, as up to that point it is only evident that the existing interchange fees are too high and that a zero interchange fee leaves room for negotiation. On 1 April 2009, the first (albeit interim) agreement is made between the EU and Mastercard, whereby interchange fees for cross-border credit cards are set to 0.3 percent and debit cards to 0.2 percent.96 This event also marks the first mention of any harmonized interchange fees (that is, concrete numbers to enable investors to form expectations about future revenue streams) for the European card payment market, determined via a common methodology and bilaterally agreed. Less than a week later, the EC charges Visa with anticompetitive behaviour and a breach of competition rules with regard to the setting of its interchange fees. The public expectation is that Visa will follow Mastercard’s actions.97 Findings show that the Visa announcement is not a statistically significant event. It can be assumed that investor expectation was for an equal and fair treatment of both card associations so that any anticipated security price impacts would have been incorporated in the previous event. Also, the retail, wholesale and international trade representation to the European Union, EuroCommerce98 was a party to the 2007 Mastercard case (34579)99 and showed continuous involvement in the interchange debates. A leakage of information towards its members cannot be ruled out. This may also be a reason why no future events would have had a statistically significant impact on market returns. Contrary to the findings of the regulatory assessment of the U.S. debit card interchange fee regulation,100 which was characterized by multiple shifts in determining the final caps on interchange fees, it seems that within Europe a consensus was reached that the levels of interchange fees are set long term. Based on above findings, if interchange fees had been abolished in 2009, consequential effects would have been immediate issuer losses of 8.8 billion Euro or a decrease in NPV of ca. 46 billion Euro. At the point in time and before the EC’s response to Mastercard’s nullification of cross-border interchange fees, given the materiality to the operating business of issuing banks and the magnitude of potential losses, this is in fact most likely to have been the investor expectation, hence incorporated in banking security prices already. Contrarily, costs of payment card processing are only one of numerous cost components for retailers. While uncertainty has prevailed during the aforementioned period, the likelihood of any cost savings from interchange fees being incorporated in security prices for retailers at this point in time remains low.101 This is also due to the fact that any cost reductions would impact merchants only indirectly, that is, if and when passed-through by acquirers. A lack of transparency in pricing of payment methods continues to exist today;102 in 2009 this ought to have represented an even larger issue. In order to provide an educated forecast on the overall consumer impact of the IFR, we shall disregard the quantification of competitiveness within the merchant sector, as this is a fundamental question that will continue to play a significant role for the degree of success of any policy enactment in a business-to-consumer environment. The EC finds that retailer markets are more competitive and transparent than banking markets and in fact consider a full (100 percent) pass-through as viable.103 Comparable, empirical research on the regulation of debit card interchange fees in the United States (from 2010) determines a pass-through rate of 49–53 percent.104 Therefore, we imply a (partial) share of benefits being passed-through from merchants to consumers. Previous findings105 in this field show that issuer markets (HHI for 2009: 2127) are in fact less concentrated than acquirer markets (HHI for 2009: 4069), resulting in a comparatively lower sensitivity of issuers to price decreases and a lower likelihood of increasing card fees and/or reductions of benefits associated with card products being passed-through towards cardholders. Given that concentration within issuing markets is 48 percent lower than within acquiring markets and considering the pass-through rate for acquirers, we can quantify a potential price increase or reduction of card benefits from issuers towards cardholders,106 resulting in a negative impact of ca. 5.3 billion Euro and thus reducing total potential benefits stemming from the regulation to 7.5 billion Euro.107 The EC determines total consumer savings between 0 and 9.96 billion Euro in the long run.108 An ultimate quantification of pass-through for acquirers and merchants cannot be performed at this stage. For one, this is due to the characteristics of the European card payments market, whereby only five pure acquirers could be identified, a widespread presence of issuer–acquirers with diverging interests is given and data is limited due to recent and increasing consolidation (M&A) activity and firms being predominantly characterized by private, rather than public ownership. For the other, prevalent pitfalls of any event study analysis such as the exclusion of non-listed (private) firms and the inherent risk of noise, that is, unrecognized market influences on the development of returns need to be acknowledged. Finally, within the data set, large firms are disproportionately represented, so that the interpretation of results shall be limited to larger, rather than smaller merchants. In light of this, our results should be interpreted with a certain amount of caution. Further insights into the European acquiring market are critical to complement existing findings; the generation of which has begun already.109 The success of any fiscal intervention in network markets characterized by the aforementioned complexities will depend on the enforceability of regulatory measures. It is noteworthy that a maximum price threshold imposed on interchange fees, disregarding charges towards merchants (MSC), cannot a priori be considered a mechanism to achieve ultimate price reductions for consumers, particularly in light of recent scheme fee developments. VIII. CONCLUSIONS As this paper has demonstrated, recent policy intervention has caused different market effects within the European card payment industry. Based on eight years’ worth of stock data collected for the largest European issuers, (extracted) pure issuers and retailers, an event study analysis is conducted to empirically determine the financial impacts of the IFR. The regulation is decomposed into separate procedural stages that have taken place in the political arena over the course of 15 years, supplemented with data on media coverage. A total of seven events is selected for the analysis. The (interim) agreement between the EC and Mastercard to set cross-border interchange fees to 0.3 percent for credit and 0.2 percent for debit cards is the single, statistically significant event. Contrary to common rationale, the average (three-day cumulative) abnormal returns for 2 April 2009 are positive for all network participants, ranging from 4.8 percent-pts (7 percent-pts) for retailers to 9 percent-pts (18 percent-pts) for issuers and 9 percent-pts (18.2 percent-pts) for pure issuers, while for all other considered event dates the AAR never surpass |$\pm 3.2$| percent-pts and t-values do not surpass |$\pm 2.9$|⁠. Given high uncertainty regarding the classification of interchange fees beforehand, including a potential abolishment, a causal link between the results and the policy intervention can be assumed. When reviewing the magnitude of the event, we find that the regulatory announcement has been positively interpreted by retail investors, leading to a total, industry-wide increase in market capitalization by 11.2 billion Euro (or 3.6 percent) on the event date. Correspondingly, an increase in market capitalization by 39.7 billion Euro (or 8.5 percent) for selected issuers and 14.8 billion Euro (or 8.9 percent) for pure issuers within the data set can also be recorded. Considering the savings for acquiring banks (equivalent to 4.7 billion Euro or an increase in NPV of 24 billion Euro), a pass-through rate of 46 percent from acquirers to merchants is determined. While a mathematical calculation of pass-through towards consumers is not feasible, mainly due to the characteristics and widespread manifestation of issuer–acquirers across Europe, preliminary findings, under consideration of a potential pass-through on the issuing side of the network, suggest a positive regulatory impact on consumers in the region of up to 7.5 billion Euro. In light of the EC’s pending review of the impacts associated with the IFR, this paper applies an alternative methodology to determine the effects of the policy intervention on market participants. Results provide empirical evidence on the re-distribution of funds with a statistical significance, highlighting merchant and consumer benefits as a direct causal consequence. Thus, the event study analysis is deemed as an appropriate tool to complement existing methodologies when addressing the topic of pass-through within European (card payment) markets. IX. APPENDIX Table A.1 Event dates Event date . Day . Stage . Description . Media coverage . 16 October 2000 Monday Initial accusation of anticompetitive behaviour (EU against Visa) Subsequently, EC finds that this is within competition guidelines (24 July 2002). Visa agrees in parallel to reduce fees so that waiver / decision would apply until end of 2007. WSJ: 16 October 2000 23 June 2006 Friday Supplementary statement of objections from EC against Mastercard Supplementary charges by the EC to a 2003 complaint against Mastercard’s interchange fees. Risk of a potential ban on interchange fees by the EC. Mastercard responds publicly (30 June 2006) stating that it was not facing any fines and intended to cooperate with the EC. WSJ: 01 July 2006 05 December 2006 Tuesday Objections from EC against Mastercard Mastercard cuts card fees by 60% on debit products (effective January 2008). WSJ: 05 December 2006 19 December 2007 Wednesday Litigation on Mastercard’s cross-border card fees First step to initiate upcoming battle on domestic interchange fees. At the point cross-border fallback fees also applied to domestic transactions in eight European countries. WSJ: 20 December 2007 EC: 19 December 2007 12 June 2008 Thursday Litigation on Mastercard’s cross-border card fees Mastercard temporarily repeals its cross-border interchange fees, that is, sets these at 0%. WSJ & EC: 12.06.2008 01 April 2009 Wednesday Litigation on Mastercard’s cross-border card fees Interim agreement between Mastercard and EC that cross-border interchange fees will be reduced to 0.3% for credit and 0.2% for debit cards. FT & WSJ & EC: 01 April 2009 07 April 2009 Tuesday Litigation on Visa’s cross-border card fees EC charges Visa with anticompetitive behaviour and a breach of competition rules. Public expectation is that Visa will follow Mastercard’s actions from less than a week ago with regard to cross-border interchange fees. FT: 06 April 2019 WSJ: 07 April 2009 26 April 2010 Monday Litigation on Visa’s cross-border card fees Visa agrees to trial the EC proposal on interchange fees and reduces these to 0.2% for domestic and cross-border debit transactions. FT & WSJ: 26 April 2010 08 December 2010 Wednesday Litigation on Visa’s cross-border card fees EC makes Visa’s commitments to cut interchange fees for debit cards legally binding. EC: 08 December 2010 11 January 2012 Wednesday Publication of EC consultation paper on European payments market Interchange fees critically assessed and determined to be barriers to payment innovation. FT & Reuters & EC: 11 January 2012 24 May 2012 Thursday Litigation on Mastercard’s cross-border card fees General Court decides to uphold EC’s decision from 2009 in relation to Mastercard’s interchange fees. FT & WSJ & Reuters & EC: 24 May 2012 31 July 2012 Tuesday Litigation on Visa’s domestic and cross-border credit card fees Antitrust complaint by EC regarding Visa’s domestic and cross-border credit card fees. Expectation is that these are reduced to the benchmark of 0.3%. FT & WSJ & Reuters: 31 July 2012 14 May 2013 Tuesday Litigation on Visa’s domestic and cross-border credit card fees Visa agrees to cut credit card interchange fees for domestic and cross-border transactions to 0.3%, representing a reduction of 40–60%. FT & WSJ & Reuters: 14 May 2013 17 July 2013 24 July 2013 Wednesday Wednesday EC proposal for a regulation of interchange fees EC proposal for a regulation of domestic and cross-border interchange fees for debit (0.2%) and credit (0.3%) card payments across Europe. CNBC & WSJ & Reuters: 17 July 2013 Finextra & Reuters & EC: 24 July 2013 03 April 2014 Thursday European Parliament Opinion Amendments adopted by European Parliament on the proposed regulation. WSJ & EC: 03 April 2014 18 December 2014 Thursday Initial agreement to proposed regulation Discussions and preliminary agreement between EU governments and the economic committee of the European parliament. Finextra & Reuters & FT: 18December 2014 Event date . Day . Stage . Description . Media coverage . 16 October 2000 Monday Initial accusation of anticompetitive behaviour (EU against Visa) Subsequently, EC finds that this is within competition guidelines (24 July 2002). Visa agrees in parallel to reduce fees so that waiver / decision would apply until end of 2007. WSJ: 16 October 2000 23 June 2006 Friday Supplementary statement of objections from EC against Mastercard Supplementary charges by the EC to a 2003 complaint against Mastercard’s interchange fees. Risk of a potential ban on interchange fees by the EC. Mastercard responds publicly (30 June 2006) stating that it was not facing any fines and intended to cooperate with the EC. WSJ: 01 July 2006 05 December 2006 Tuesday Objections from EC against Mastercard Mastercard cuts card fees by 60% on debit products (effective January 2008). WSJ: 05 December 2006 19 December 2007 Wednesday Litigation on Mastercard’s cross-border card fees First step to initiate upcoming battle on domestic interchange fees. At the point cross-border fallback fees also applied to domestic transactions in eight European countries. WSJ: 20 December 2007 EC: 19 December 2007 12 June 2008 Thursday Litigation on Mastercard’s cross-border card fees Mastercard temporarily repeals its cross-border interchange fees, that is, sets these at 0%. WSJ & EC: 12.06.2008 01 April 2009 Wednesday Litigation on Mastercard’s cross-border card fees Interim agreement between Mastercard and EC that cross-border interchange fees will be reduced to 0.3% for credit and 0.2% for debit cards. FT & WSJ & EC: 01 April 2009 07 April 2009 Tuesday Litigation on Visa’s cross-border card fees EC charges Visa with anticompetitive behaviour and a breach of competition rules. Public expectation is that Visa will follow Mastercard’s actions from less than a week ago with regard to cross-border interchange fees. FT: 06 April 2019 WSJ: 07 April 2009 26 April 2010 Monday Litigation on Visa’s cross-border card fees Visa agrees to trial the EC proposal on interchange fees and reduces these to 0.2% for domestic and cross-border debit transactions. FT & WSJ: 26 April 2010 08 December 2010 Wednesday Litigation on Visa’s cross-border card fees EC makes Visa’s commitments to cut interchange fees for debit cards legally binding. EC: 08 December 2010 11 January 2012 Wednesday Publication of EC consultation paper on European payments market Interchange fees critically assessed and determined to be barriers to payment innovation. FT & Reuters & EC: 11 January 2012 24 May 2012 Thursday Litigation on Mastercard’s cross-border card fees General Court decides to uphold EC’s decision from 2009 in relation to Mastercard’s interchange fees. FT & WSJ & Reuters & EC: 24 May 2012 31 July 2012 Tuesday Litigation on Visa’s domestic and cross-border credit card fees Antitrust complaint by EC regarding Visa’s domestic and cross-border credit card fees. Expectation is that these are reduced to the benchmark of 0.3%. FT & WSJ & Reuters: 31 July 2012 14 May 2013 Tuesday Litigation on Visa’s domestic and cross-border credit card fees Visa agrees to cut credit card interchange fees for domestic and cross-border transactions to 0.3%, representing a reduction of 40–60%. FT & WSJ & Reuters: 14 May 2013 17 July 2013 24 July 2013 Wednesday Wednesday EC proposal for a regulation of interchange fees EC proposal for a regulation of domestic and cross-border interchange fees for debit (0.2%) and credit (0.3%) card payments across Europe. CNBC & WSJ & Reuters: 17 July 2013 Finextra & Reuters & EC: 24 July 2013 03 April 2014 Thursday European Parliament Opinion Amendments adopted by European Parliament on the proposed regulation. WSJ & EC: 03 April 2014 18 December 2014 Thursday Initial agreement to proposed regulation Discussions and preliminary agreement between EU governments and the economic committee of the European parliament. Finextra & Reuters & FT: 18December 2014 Open in new tab Table A.1 Event dates Event date . Day . Stage . Description . Media coverage . 16 October 2000 Monday Initial accusation of anticompetitive behaviour (EU against Visa) Subsequently, EC finds that this is within competition guidelines (24 July 2002). Visa agrees in parallel to reduce fees so that waiver / decision would apply until end of 2007. WSJ: 16 October 2000 23 June 2006 Friday Supplementary statement of objections from EC against Mastercard Supplementary charges by the EC to a 2003 complaint against Mastercard’s interchange fees. Risk of a potential ban on interchange fees by the EC. Mastercard responds publicly (30 June 2006) stating that it was not facing any fines and intended to cooperate with the EC. WSJ: 01 July 2006 05 December 2006 Tuesday Objections from EC against Mastercard Mastercard cuts card fees by 60% on debit products (effective January 2008). WSJ: 05 December 2006 19 December 2007 Wednesday Litigation on Mastercard’s cross-border card fees First step to initiate upcoming battle on domestic interchange fees. At the point cross-border fallback fees also applied to domestic transactions in eight European countries. WSJ: 20 December 2007 EC: 19 December 2007 12 June 2008 Thursday Litigation on Mastercard’s cross-border card fees Mastercard temporarily repeals its cross-border interchange fees, that is, sets these at 0%. WSJ & EC: 12.06.2008 01 April 2009 Wednesday Litigation on Mastercard’s cross-border card fees Interim agreement between Mastercard and EC that cross-border interchange fees will be reduced to 0.3% for credit and 0.2% for debit cards. FT & WSJ & EC: 01 April 2009 07 April 2009 Tuesday Litigation on Visa’s cross-border card fees EC charges Visa with anticompetitive behaviour and a breach of competition rules. Public expectation is that Visa will follow Mastercard’s actions from less than a week ago with regard to cross-border interchange fees. FT: 06 April 2019 WSJ: 07 April 2009 26 April 2010 Monday Litigation on Visa’s cross-border card fees Visa agrees to trial the EC proposal on interchange fees and reduces these to 0.2% for domestic and cross-border debit transactions. FT & WSJ: 26 April 2010 08 December 2010 Wednesday Litigation on Visa’s cross-border card fees EC makes Visa’s commitments to cut interchange fees for debit cards legally binding. EC: 08 December 2010 11 January 2012 Wednesday Publication of EC consultation paper on European payments market Interchange fees critically assessed and determined to be barriers to payment innovation. FT & Reuters & EC: 11 January 2012 24 May 2012 Thursday Litigation on Mastercard’s cross-border card fees General Court decides to uphold EC’s decision from 2009 in relation to Mastercard’s interchange fees. FT & WSJ & Reuters & EC: 24 May 2012 31 July 2012 Tuesday Litigation on Visa’s domestic and cross-border credit card fees Antitrust complaint by EC regarding Visa’s domestic and cross-border credit card fees. Expectation is that these are reduced to the benchmark of 0.3%. FT & WSJ & Reuters: 31 July 2012 14 May 2013 Tuesday Litigation on Visa’s domestic and cross-border credit card fees Visa agrees to cut credit card interchange fees for domestic and cross-border transactions to 0.3%, representing a reduction of 40–60%. FT & WSJ & Reuters: 14 May 2013 17 July 2013 24 July 2013 Wednesday Wednesday EC proposal for a regulation of interchange fees EC proposal for a regulation of domestic and cross-border interchange fees for debit (0.2%) and credit (0.3%) card payments across Europe. CNBC & WSJ & Reuters: 17 July 2013 Finextra & Reuters & EC: 24 July 2013 03 April 2014 Thursday European Parliament Opinion Amendments adopted by European Parliament on the proposed regulation. WSJ & EC: 03 April 2014 18 December 2014 Thursday Initial agreement to proposed regulation Discussions and preliminary agreement between EU governments and the economic committee of the European parliament. Finextra & Reuters & FT: 18December 2014 Event date . Day . Stage . Description . Media coverage . 16 October 2000 Monday Initial accusation of anticompetitive behaviour (EU against Visa) Subsequently, EC finds that this is within competition guidelines (24 July 2002). Visa agrees in parallel to reduce fees so that waiver / decision would apply until end of 2007. WSJ: 16 October 2000 23 June 2006 Friday Supplementary statement of objections from EC against Mastercard Supplementary charges by the EC to a 2003 complaint against Mastercard’s interchange fees. Risk of a potential ban on interchange fees by the EC. Mastercard responds publicly (30 June 2006) stating that it was not facing any fines and intended to cooperate with the EC. WSJ: 01 July 2006 05 December 2006 Tuesday Objections from EC against Mastercard Mastercard cuts card fees by 60% on debit products (effective January 2008). WSJ: 05 December 2006 19 December 2007 Wednesday Litigation on Mastercard’s cross-border card fees First step to initiate upcoming battle on domestic interchange fees. At the point cross-border fallback fees also applied to domestic transactions in eight European countries. WSJ: 20 December 2007 EC: 19 December 2007 12 June 2008 Thursday Litigation on Mastercard’s cross-border card fees Mastercard temporarily repeals its cross-border interchange fees, that is, sets these at 0%. WSJ & EC: 12.06.2008 01 April 2009 Wednesday Litigation on Mastercard’s cross-border card fees Interim agreement between Mastercard and EC that cross-border interchange fees will be reduced to 0.3% for credit and 0.2% for debit cards. FT & WSJ & EC: 01 April 2009 07 April 2009 Tuesday Litigation on Visa’s cross-border card fees EC charges Visa with anticompetitive behaviour and a breach of competition rules. Public expectation is that Visa will follow Mastercard’s actions from less than a week ago with regard to cross-border interchange fees. FT: 06 April 2019 WSJ: 07 April 2009 26 April 2010 Monday Litigation on Visa’s cross-border card fees Visa agrees to trial the EC proposal on interchange fees and reduces these to 0.2% for domestic and cross-border debit transactions. FT & WSJ: 26 April 2010 08 December 2010 Wednesday Litigation on Visa’s cross-border card fees EC makes Visa’s commitments to cut interchange fees for debit cards legally binding. EC: 08 December 2010 11 January 2012 Wednesday Publication of EC consultation paper on European payments market Interchange fees critically assessed and determined to be barriers to payment innovation. FT & Reuters & EC: 11 January 2012 24 May 2012 Thursday Litigation on Mastercard’s cross-border card fees General Court decides to uphold EC’s decision from 2009 in relation to Mastercard’s interchange fees. FT & WSJ & Reuters & EC: 24 May 2012 31 July 2012 Tuesday Litigation on Visa’s domestic and cross-border credit card fees Antitrust complaint by EC regarding Visa’s domestic and cross-border credit card fees. Expectation is that these are reduced to the benchmark of 0.3%. FT & WSJ & Reuters: 31 July 2012 14 May 2013 Tuesday Litigation on Visa’s domestic and cross-border credit card fees Visa agrees to cut credit card interchange fees for domestic and cross-border transactions to 0.3%, representing a reduction of 40–60%. FT & WSJ & Reuters: 14 May 2013 17 July 2013 24 July 2013 Wednesday Wednesday EC proposal for a regulation of interchange fees EC proposal for a regulation of domestic and cross-border interchange fees for debit (0.2%) and credit (0.3%) card payments across Europe. CNBC & WSJ & Reuters: 17 July 2013 Finextra & Reuters & EC: 24 July 2013 03 April 2014 Thursday European Parliament Opinion Amendments adopted by European Parliament on the proposed regulation. WSJ & EC: 03 April 2014 18 December 2014 Thursday Initial agreement to proposed regulation Discussions and preliminary agreement between EU governments and the economic committee of the European parliament. Finextra & Reuters & FT: 18December 2014 Open in new tab Table A.2 Results of event studies . Retailers . Issuers . Pure Issuers . Date . AAR . CAAR . t-test . AAR . CAAR . t-test . AAR . CAAR . t-test . 2008-06-11 -0.010 -0.010 -0.990 -0.020 -0.020 -1.768 -0.024 -0.024 -2.057 2008-06-12 0.010 0.000 0.968 0.022 0.001 1.859 0.022 -0.002 1.904 2008-06-13 0.000 0.000 0.040 0.000 0.001 0.042 0.001 -0.001 0.118 2009-03-31 0.005 0.005 0.551 0.044 0.044 3.901 0.054 0.054 4.557 2009-04-01 0.016 0.021 1.612 0.037 0.082 3.250 0.029 0.084 2.414 2009-04-02 0.048 0.070 4.937 0.090 0.180 7.990 0.090 0.182 7.647 2010-04-23 0.015 0.015 2.093 0.003 0.003 0.307 0.006 0.006 0.550 2010-04-26 0.008 0.023 1.052 0.013 0.016 1.321 0.010 0.016 0.849 2010-04-27 -0.011 0.012 -1.482 -0.014 0.002 -1.370 -0.012 0.004 -1.055 2010-12-07 0.012 0.012 1.443 -0.002 -0.002 -0.147 -0.004 -0.004 -0.423 2010-12-08 -0.006 0.005 -0.772 0.008 0.006 0.768 0.000 -0.004 0.048 2010-12-09 -0.010 -0.005 -1.249 0.016 0.022 1.570 0.014 0.010 1.299 2012-07-30 0.016 0.016 1.823 0.032 0.032 2.840 0.032 0.032 2.877 2012-07-31 -0.006 0.010 -0.651 -0.013 0.018 -1.186 -0.011 0.020 -1.023 2012-08-01 -0.006 0.005 -0.632 0.007 0.025 0.591 0.011 0.032 1.004 2013-07-16 -0.006 -0.006 -0.818 -0.009 -0.009 -0.996 -0.008 -0.008 -0.774 2013-07-17 0.009 0.002 1.076 0.005 -0.004 0.514 0.008 0.000 0.816 2013-07-18 0.008 0.010 1.040 0.018 0.013 1.912 0.015 0.015 1.525 2013-07-23 -0.012 -0.012 -1.516 0.004 0.004 0.382 0.005 0.005 0.564 2013-07-24 0.000 -0.011 0.061 0.009 0.012 0.975 0.010 0.016 1.060 2013-07-25 -0.004 -0.015 -0.526 0.002 0.015 0.227 0.002 0.018 0.195 2014-04-02 0.004 0.004 0.542 0.001 0.001 0.107 0.000 0.000 0.040 2014-04-03 -0.001 0.003 -0.109 0.006 0.007 0.835 0.003 0.003 0.349 2014-04-04 -0.003 0.000 -0.464 0.007 0.014 0.935 0.005 0.008 0.645 . Retailers . Issuers . Pure Issuers . Date . AAR . CAAR . t-test . AAR . CAAR . t-test . AAR . CAAR . t-test . 2008-06-11 -0.010 -0.010 -0.990 -0.020 -0.020 -1.768 -0.024 -0.024 -2.057 2008-06-12 0.010 0.000 0.968 0.022 0.001 1.859 0.022 -0.002 1.904 2008-06-13 0.000 0.000 0.040 0.000 0.001 0.042 0.001 -0.001 0.118 2009-03-31 0.005 0.005 0.551 0.044 0.044 3.901 0.054 0.054 4.557 2009-04-01 0.016 0.021 1.612 0.037 0.082 3.250 0.029 0.084 2.414 2009-04-02 0.048 0.070 4.937 0.090 0.180 7.990 0.090 0.182 7.647 2010-04-23 0.015 0.015 2.093 0.003 0.003 0.307 0.006 0.006 0.550 2010-04-26 0.008 0.023 1.052 0.013 0.016 1.321 0.010 0.016 0.849 2010-04-27 -0.011 0.012 -1.482 -0.014 0.002 -1.370 -0.012 0.004 -1.055 2010-12-07 0.012 0.012 1.443 -0.002 -0.002 -0.147 -0.004 -0.004 -0.423 2010-12-08 -0.006 0.005 -0.772 0.008 0.006 0.768 0.000 -0.004 0.048 2010-12-09 -0.010 -0.005 -1.249 0.016 0.022 1.570 0.014 0.010 1.299 2012-07-30 0.016 0.016 1.823 0.032 0.032 2.840 0.032 0.032 2.877 2012-07-31 -0.006 0.010 -0.651 -0.013 0.018 -1.186 -0.011 0.020 -1.023 2012-08-01 -0.006 0.005 -0.632 0.007 0.025 0.591 0.011 0.032 1.004 2013-07-16 -0.006 -0.006 -0.818 -0.009 -0.009 -0.996 -0.008 -0.008 -0.774 2013-07-17 0.009 0.002 1.076 0.005 -0.004 0.514 0.008 0.000 0.816 2013-07-18 0.008 0.010 1.040 0.018 0.013 1.912 0.015 0.015 1.525 2013-07-23 -0.012 -0.012 -1.516 0.004 0.004 0.382 0.005 0.005 0.564 2013-07-24 0.000 -0.011 0.061 0.009 0.012 0.975 0.010 0.016 1.060 2013-07-25 -0.004 -0.015 -0.526 0.002 0.015 0.227 0.002 0.018 0.195 2014-04-02 0.004 0.004 0.542 0.001 0.001 0.107 0.000 0.000 0.040 2014-04-03 -0.001 0.003 -0.109 0.006 0.007 0.835 0.003 0.003 0.349 2014-04-04 -0.003 0.000 -0.464 0.007 0.014 0.935 0.005 0.008 0.645 Open in new tab Table A.2 Results of event studies . Retailers . Issuers . Pure Issuers . Date . AAR . CAAR . t-test . AAR . CAAR . t-test . AAR . CAAR . t-test . 2008-06-11 -0.010 -0.010 -0.990 -0.020 -0.020 -1.768 -0.024 -0.024 -2.057 2008-06-12 0.010 0.000 0.968 0.022 0.001 1.859 0.022 -0.002 1.904 2008-06-13 0.000 0.000 0.040 0.000 0.001 0.042 0.001 -0.001 0.118 2009-03-31 0.005 0.005 0.551 0.044 0.044 3.901 0.054 0.054 4.557 2009-04-01 0.016 0.021 1.612 0.037 0.082 3.250 0.029 0.084 2.414 2009-04-02 0.048 0.070 4.937 0.090 0.180 7.990 0.090 0.182 7.647 2010-04-23 0.015 0.015 2.093 0.003 0.003 0.307 0.006 0.006 0.550 2010-04-26 0.008 0.023 1.052 0.013 0.016 1.321 0.010 0.016 0.849 2010-04-27 -0.011 0.012 -1.482 -0.014 0.002 -1.370 -0.012 0.004 -1.055 2010-12-07 0.012 0.012 1.443 -0.002 -0.002 -0.147 -0.004 -0.004 -0.423 2010-12-08 -0.006 0.005 -0.772 0.008 0.006 0.768 0.000 -0.004 0.048 2010-12-09 -0.010 -0.005 -1.249 0.016 0.022 1.570 0.014 0.010 1.299 2012-07-30 0.016 0.016 1.823 0.032 0.032 2.840 0.032 0.032 2.877 2012-07-31 -0.006 0.010 -0.651 -0.013 0.018 -1.186 -0.011 0.020 -1.023 2012-08-01 -0.006 0.005 -0.632 0.007 0.025 0.591 0.011 0.032 1.004 2013-07-16 -0.006 -0.006 -0.818 -0.009 -0.009 -0.996 -0.008 -0.008 -0.774 2013-07-17 0.009 0.002 1.076 0.005 -0.004 0.514 0.008 0.000 0.816 2013-07-18 0.008 0.010 1.040 0.018 0.013 1.912 0.015 0.015 1.525 2013-07-23 -0.012 -0.012 -1.516 0.004 0.004 0.382 0.005 0.005 0.564 2013-07-24 0.000 -0.011 0.061 0.009 0.012 0.975 0.010 0.016 1.060 2013-07-25 -0.004 -0.015 -0.526 0.002 0.015 0.227 0.002 0.018 0.195 2014-04-02 0.004 0.004 0.542 0.001 0.001 0.107 0.000 0.000 0.040 2014-04-03 -0.001 0.003 -0.109 0.006 0.007 0.835 0.003 0.003 0.349 2014-04-04 -0.003 0.000 -0.464 0.007 0.014 0.935 0.005 0.008 0.645 . Retailers . Issuers . Pure Issuers . Date . AAR . CAAR . t-test . AAR . CAAR . t-test . AAR . CAAR . t-test . 2008-06-11 -0.010 -0.010 -0.990 -0.020 -0.020 -1.768 -0.024 -0.024 -2.057 2008-06-12 0.010 0.000 0.968 0.022 0.001 1.859 0.022 -0.002 1.904 2008-06-13 0.000 0.000 0.040 0.000 0.001 0.042 0.001 -0.001 0.118 2009-03-31 0.005 0.005 0.551 0.044 0.044 3.901 0.054 0.054 4.557 2009-04-01 0.016 0.021 1.612 0.037 0.082 3.250 0.029 0.084 2.414 2009-04-02 0.048 0.070 4.937 0.090 0.180 7.990 0.090 0.182 7.647 2010-04-23 0.015 0.015 2.093 0.003 0.003 0.307 0.006 0.006 0.550 2010-04-26 0.008 0.023 1.052 0.013 0.016 1.321 0.010 0.016 0.849 2010-04-27 -0.011 0.012 -1.482 -0.014 0.002 -1.370 -0.012 0.004 -1.055 2010-12-07 0.012 0.012 1.443 -0.002 -0.002 -0.147 -0.004 -0.004 -0.423 2010-12-08 -0.006 0.005 -0.772 0.008 0.006 0.768 0.000 -0.004 0.048 2010-12-09 -0.010 -0.005 -1.249 0.016 0.022 1.570 0.014 0.010 1.299 2012-07-30 0.016 0.016 1.823 0.032 0.032 2.840 0.032 0.032 2.877 2012-07-31 -0.006 0.010 -0.651 -0.013 0.018 -1.186 -0.011 0.020 -1.023 2012-08-01 -0.006 0.005 -0.632 0.007 0.025 0.591 0.011 0.032 1.004 2013-07-16 -0.006 -0.006 -0.818 -0.009 -0.009 -0.996 -0.008 -0.008 -0.774 2013-07-17 0.009 0.002 1.076 0.005 -0.004 0.514 0.008 0.000 0.816 2013-07-18 0.008 0.010 1.040 0.018 0.013 1.912 0.015 0.015 1.525 2013-07-23 -0.012 -0.012 -1.516 0.004 0.004 0.382 0.005 0.005 0.564 2013-07-24 0.000 -0.011 0.061 0.009 0.012 0.975 0.010 0.016 1.060 2013-07-25 -0.004 -0.015 -0.526 0.002 0.015 0.227 0.002 0.018 0.195 2014-04-02 0.004 0.004 0.542 0.001 0.001 0.107 0.000 0.000 0.040 2014-04-03 -0.001 0.003 -0.109 0.006 0.007 0.835 0.003 0.003 0.349 2014-04-04 -0.003 0.000 -0.464 0.007 0.014 0.935 0.005 0.008 0.645 Open in new tab Table A.3 Descriptive statistics: daily returns—issuers Variable . Mean . SD . Min . Max . Cap % . HSBA.L -0.0002 0.0122 -0.0334 0.0331 0.1837 BSD2.DE -0.0004 0.0187 -0.0513 0.0507 0.0813 BNP.PA -0.0001 0.0191 -0.0522 0.0527 0.0659 LLD.F -0.0005 0.0245 -0.0676 0.0661 0.0541 INGA.AS 0.0007 0.0224 -0.0599 0.0606 0.05 ISP.MI 0.0005 0.0219 -0.0592 0.0595 0.0433 BBVA -0.0001 0.0195 -0.0541 0.0539 0.04 ACA.PA -0.0003 0.0225 -0.0631 0.0616 0.0388 RBS.L -0.0006 0.0231 -0.0615 0.0608 0.0377 BARC.L -0.0006 0.0197 -0.0555 0.0543 0.0377 SGE.F -0.0003 0.023 -0.0638 0.0644 0.0315 CRIN.DE 0.0002 0.0241 -0.0656 0.0658 0.0312 DNB.OL 0.0001 0.0159 -0.0444 0.0446 0.0311 KBC.BR 0.0 0.0238 -0.0672 0.0675 0.0309 NDA-FI.HE -0.0001 0.0162 -0.0447 0.045 0.0295 SEB-C.ST -0.0002 0.0137 -0.0388 0.0387 0.0249 SVHH.F 0.0001 0.0144 -0.0394 0.0399 0.0203 DBK.DE -0.0004 0.019 -0.0528 0.0526 0.0181 FRYA.F 0.0005 0.0137 -0.0383 0.0393 0.0174 EBS.VI 0.0002 0.0229 -0.0631 0.0631 0.0172 CABK.MC 0.0001 0.0164 -0.0432 0.0435 0.0167 DSN.F -0.0006 0.0139 -0.0395 0.0387 0.0146 OTP.F -0.0001 0.0223 -0.0607 0.0598 0.013 CBK.DE -0.0011 0.0228 -0.0634 0.0611 0.01 RBI.VI -0.001 0.0238 -0.066 0.0629 0.0088 BKT.MC -0.0007 0.0205 -0.0542 0.0543 0.0068 SAB.MC -0.0013 0.0151 -0.0422 0.0398 0.0057 BIRG.L -0.0015 0.0294 -0.086 0.0838 0.0057 BCP.LS -0.0015 0.0227 -0.0619 0.0592 0.0047 OBS.VI 0.0 0.0 -0.0001 0.0002 0.0041 EFGD.F -0.0072 0.0397 -0.1163 0.102 0.0039 UBI.MI -0.0008 0.0213 -0.0575 0.0567 0.0034 BAMI.MI -0.0015 0.0251 -0.0699 0.0671 0.0032 ACBB.F -0.0046 0.0338 -0.097 0.0884 0.0031 ETE.AT -0.0023 0.0355 -0.1024 0.0959 0.0028 DEXB.BR -0.0035 0.0272 -0.0836 0.0748 0.0019 MING.OL 0.0001 0.0134 -0.0365 0.0364 0.0016 TPEIR.AT -0.0036 0.0359 -0.1016 0.0949 0.0015 TM2.F 0.0001 0.0121 -0.0336 0.034 0.0012 BPSO.MI -0.0011 0.0156 -0.0435 0.042 0.0011 IL0A.IR -0.0003 0.044 -0.1212 0.1226 0.0007 SAB1L.VS -0.0005 0.0105 -0.0294 0.029 0.0004 KOMB.PR -0.0002 0.0146 -0.04 0.0401 0.0003 Variable . Mean . SD . Min . Max . Cap % . HSBA.L -0.0002 0.0122 -0.0334 0.0331 0.1837 BSD2.DE -0.0004 0.0187 -0.0513 0.0507 0.0813 BNP.PA -0.0001 0.0191 -0.0522 0.0527 0.0659 LLD.F -0.0005 0.0245 -0.0676 0.0661 0.0541 INGA.AS 0.0007 0.0224 -0.0599 0.0606 0.05 ISP.MI 0.0005 0.0219 -0.0592 0.0595 0.0433 BBVA -0.0001 0.0195 -0.0541 0.0539 0.04 ACA.PA -0.0003 0.0225 -0.0631 0.0616 0.0388 RBS.L -0.0006 0.0231 -0.0615 0.0608 0.0377 BARC.L -0.0006 0.0197 -0.0555 0.0543 0.0377 SGE.F -0.0003 0.023 -0.0638 0.0644 0.0315 CRIN.DE 0.0002 0.0241 -0.0656 0.0658 0.0312 DNB.OL 0.0001 0.0159 -0.0444 0.0446 0.0311 KBC.BR 0.0 0.0238 -0.0672 0.0675 0.0309 NDA-FI.HE -0.0001 0.0162 -0.0447 0.045 0.0295 SEB-C.ST -0.0002 0.0137 -0.0388 0.0387 0.0249 SVHH.F 0.0001 0.0144 -0.0394 0.0399 0.0203 DBK.DE -0.0004 0.019 -0.0528 0.0526 0.0181 FRYA.F 0.0005 0.0137 -0.0383 0.0393 0.0174 EBS.VI 0.0002 0.0229 -0.0631 0.0631 0.0172 CABK.MC 0.0001 0.0164 -0.0432 0.0435 0.0167 DSN.F -0.0006 0.0139 -0.0395 0.0387 0.0146 OTP.F -0.0001 0.0223 -0.0607 0.0598 0.013 CBK.DE -0.0011 0.0228 -0.0634 0.0611 0.01 RBI.VI -0.001 0.0238 -0.066 0.0629 0.0088 BKT.MC -0.0007 0.0205 -0.0542 0.0543 0.0068 SAB.MC -0.0013 0.0151 -0.0422 0.0398 0.0057 BIRG.L -0.0015 0.0294 -0.086 0.0838 0.0057 BCP.LS -0.0015 0.0227 -0.0619 0.0592 0.0047 OBS.VI 0.0 0.0 -0.0001 0.0002 0.0041 EFGD.F -0.0072 0.0397 -0.1163 0.102 0.0039 UBI.MI -0.0008 0.0213 -0.0575 0.0567 0.0034 BAMI.MI -0.0015 0.0251 -0.0699 0.0671 0.0032 ACBB.F -0.0046 0.0338 -0.097 0.0884 0.0031 ETE.AT -0.0023 0.0355 -0.1024 0.0959 0.0028 DEXB.BR -0.0035 0.0272 -0.0836 0.0748 0.0019 MING.OL 0.0001 0.0134 -0.0365 0.0364 0.0016 TPEIR.AT -0.0036 0.0359 -0.1016 0.0949 0.0015 TM2.F 0.0001 0.0121 -0.0336 0.034 0.0012 BPSO.MI -0.0011 0.0156 -0.0435 0.042 0.0011 IL0A.IR -0.0003 0.044 -0.1212 0.1226 0.0007 SAB1L.VS -0.0005 0.0105 -0.0294 0.029 0.0004 KOMB.PR -0.0002 0.0146 -0.04 0.0401 0.0003 Open in new tab Table A.3 Descriptive statistics: daily returns—issuers Variable . Mean . SD . Min . Max . Cap % . HSBA.L -0.0002 0.0122 -0.0334 0.0331 0.1837 BSD2.DE -0.0004 0.0187 -0.0513 0.0507 0.0813 BNP.PA -0.0001 0.0191 -0.0522 0.0527 0.0659 LLD.F -0.0005 0.0245 -0.0676 0.0661 0.0541 INGA.AS 0.0007 0.0224 -0.0599 0.0606 0.05 ISP.MI 0.0005 0.0219 -0.0592 0.0595 0.0433 BBVA -0.0001 0.0195 -0.0541 0.0539 0.04 ACA.PA -0.0003 0.0225 -0.0631 0.0616 0.0388 RBS.L -0.0006 0.0231 -0.0615 0.0608 0.0377 BARC.L -0.0006 0.0197 -0.0555 0.0543 0.0377 SGE.F -0.0003 0.023 -0.0638 0.0644 0.0315 CRIN.DE 0.0002 0.0241 -0.0656 0.0658 0.0312 DNB.OL 0.0001 0.0159 -0.0444 0.0446 0.0311 KBC.BR 0.0 0.0238 -0.0672 0.0675 0.0309 NDA-FI.HE -0.0001 0.0162 -0.0447 0.045 0.0295 SEB-C.ST -0.0002 0.0137 -0.0388 0.0387 0.0249 SVHH.F 0.0001 0.0144 -0.0394 0.0399 0.0203 DBK.DE -0.0004 0.019 -0.0528 0.0526 0.0181 FRYA.F 0.0005 0.0137 -0.0383 0.0393 0.0174 EBS.VI 0.0002 0.0229 -0.0631 0.0631 0.0172 CABK.MC 0.0001 0.0164 -0.0432 0.0435 0.0167 DSN.F -0.0006 0.0139 -0.0395 0.0387 0.0146 OTP.F -0.0001 0.0223 -0.0607 0.0598 0.013 CBK.DE -0.0011 0.0228 -0.0634 0.0611 0.01 RBI.VI -0.001 0.0238 -0.066 0.0629 0.0088 BKT.MC -0.0007 0.0205 -0.0542 0.0543 0.0068 SAB.MC -0.0013 0.0151 -0.0422 0.0398 0.0057 BIRG.L -0.0015 0.0294 -0.086 0.0838 0.0057 BCP.LS -0.0015 0.0227 -0.0619 0.0592 0.0047 OBS.VI 0.0 0.0 -0.0001 0.0002 0.0041 EFGD.F -0.0072 0.0397 -0.1163 0.102 0.0039 UBI.MI -0.0008 0.0213 -0.0575 0.0567 0.0034 BAMI.MI -0.0015 0.0251 -0.0699 0.0671 0.0032 ACBB.F -0.0046 0.0338 -0.097 0.0884 0.0031 ETE.AT -0.0023 0.0355 -0.1024 0.0959 0.0028 DEXB.BR -0.0035 0.0272 -0.0836 0.0748 0.0019 MING.OL 0.0001 0.0134 -0.0365 0.0364 0.0016 TPEIR.AT -0.0036 0.0359 -0.1016 0.0949 0.0015 TM2.F 0.0001 0.0121 -0.0336 0.034 0.0012 BPSO.MI -0.0011 0.0156 -0.0435 0.042 0.0011 IL0A.IR -0.0003 0.044 -0.1212 0.1226 0.0007 SAB1L.VS -0.0005 0.0105 -0.0294 0.029 0.0004 KOMB.PR -0.0002 0.0146 -0.04 0.0401 0.0003 Variable . Mean . SD . Min . Max . Cap % . HSBA.L -0.0002 0.0122 -0.0334 0.0331 0.1837 BSD2.DE -0.0004 0.0187 -0.0513 0.0507 0.0813 BNP.PA -0.0001 0.0191 -0.0522 0.0527 0.0659 LLD.F -0.0005 0.0245 -0.0676 0.0661 0.0541 INGA.AS 0.0007 0.0224 -0.0599 0.0606 0.05 ISP.MI 0.0005 0.0219 -0.0592 0.0595 0.0433 BBVA -0.0001 0.0195 -0.0541 0.0539 0.04 ACA.PA -0.0003 0.0225 -0.0631 0.0616 0.0388 RBS.L -0.0006 0.0231 -0.0615 0.0608 0.0377 BARC.L -0.0006 0.0197 -0.0555 0.0543 0.0377 SGE.F -0.0003 0.023 -0.0638 0.0644 0.0315 CRIN.DE 0.0002 0.0241 -0.0656 0.0658 0.0312 DNB.OL 0.0001 0.0159 -0.0444 0.0446 0.0311 KBC.BR 0.0 0.0238 -0.0672 0.0675 0.0309 NDA-FI.HE -0.0001 0.0162 -0.0447 0.045 0.0295 SEB-C.ST -0.0002 0.0137 -0.0388 0.0387 0.0249 SVHH.F 0.0001 0.0144 -0.0394 0.0399 0.0203 DBK.DE -0.0004 0.019 -0.0528 0.0526 0.0181 FRYA.F 0.0005 0.0137 -0.0383 0.0393 0.0174 EBS.VI 0.0002 0.0229 -0.0631 0.0631 0.0172 CABK.MC 0.0001 0.0164 -0.0432 0.0435 0.0167 DSN.F -0.0006 0.0139 -0.0395 0.0387 0.0146 OTP.F -0.0001 0.0223 -0.0607 0.0598 0.013 CBK.DE -0.0011 0.0228 -0.0634 0.0611 0.01 RBI.VI -0.001 0.0238 -0.066 0.0629 0.0088 BKT.MC -0.0007 0.0205 -0.0542 0.0543 0.0068 SAB.MC -0.0013 0.0151 -0.0422 0.0398 0.0057 BIRG.L -0.0015 0.0294 -0.086 0.0838 0.0057 BCP.LS -0.0015 0.0227 -0.0619 0.0592 0.0047 OBS.VI 0.0 0.0 -0.0001 0.0002 0.0041 EFGD.F -0.0072 0.0397 -0.1163 0.102 0.0039 UBI.MI -0.0008 0.0213 -0.0575 0.0567 0.0034 BAMI.MI -0.0015 0.0251 -0.0699 0.0671 0.0032 ACBB.F -0.0046 0.0338 -0.097 0.0884 0.0031 ETE.AT -0.0023 0.0355 -0.1024 0.0959 0.0028 DEXB.BR -0.0035 0.0272 -0.0836 0.0748 0.0019 MING.OL 0.0001 0.0134 -0.0365 0.0364 0.0016 TPEIR.AT -0.0036 0.0359 -0.1016 0.0949 0.0015 TM2.F 0.0001 0.0121 -0.0336 0.034 0.0012 BPSO.MI -0.0011 0.0156 -0.0435 0.042 0.0011 IL0A.IR -0.0003 0.044 -0.1212 0.1226 0.0007 SAB1L.VS -0.0005 0.0105 -0.0294 0.029 0.0004 KOMB.PR -0.0002 0.0146 -0.04 0.0401 0.0003 Open in new tab Table A.4 Descriptive statistics: daily returns—pure issuers Variable . Mean . SD . Min . Max . Cap % . HSBA.L -0.0002 0.0122 -0.0334 0.0331 0.4739 BSD2.DE -0.0003 0.0186 -0.0513 0.0507 0.2098 RBS.L -0.0007 0.0232 -0.0615 0.0608 0.0972 KBC.BR -0.0001 0.0238 -0.0672 0.0675 0.0796 CABK.MC 0.0 0.0164 -0.0432 0.0435 0.0432 CBK.DE -0.0012 0.0227 -0.0634 0.0611 0.0258 BKT.MC -0.0006 0.0205 -0.0542 0.0543 0.0175 OBS.VI 0.0 0.0 -0.0001 0.0002 0.0107 UBI.MI -0.0007 0.0212 -0.0575 0.0567 0.0087 BAMI.MI -0.0015 0.0249 -0.0699 0.0671 0.0083 JYS1.F -0.0002 0.0106 -0.0292 0.0292 0.0073 ETE.AT -0.0021 0.0353 -0.1024 0.0959 0.0072 DEXB.BR -0.0034 0.027 -0.0836 0.0748 0.005 TM2.F 0.0 0.0121 -0.0336 0.034 0.0031 IL0A.IR -0.0003 0.044 -0.1212 0.1226 0.0017 SAB1L.VS -0.0005 0.0105 -0.0294 0.029 0.0009 Variable . Mean . SD . Min . Max . Cap % . HSBA.L -0.0002 0.0122 -0.0334 0.0331 0.4739 BSD2.DE -0.0003 0.0186 -0.0513 0.0507 0.2098 RBS.L -0.0007 0.0232 -0.0615 0.0608 0.0972 KBC.BR -0.0001 0.0238 -0.0672 0.0675 0.0796 CABK.MC 0.0 0.0164 -0.0432 0.0435 0.0432 CBK.DE -0.0012 0.0227 -0.0634 0.0611 0.0258 BKT.MC -0.0006 0.0205 -0.0542 0.0543 0.0175 OBS.VI 0.0 0.0 -0.0001 0.0002 0.0107 UBI.MI -0.0007 0.0212 -0.0575 0.0567 0.0087 BAMI.MI -0.0015 0.0249 -0.0699 0.0671 0.0083 JYS1.F -0.0002 0.0106 -0.0292 0.0292 0.0073 ETE.AT -0.0021 0.0353 -0.1024 0.0959 0.0072 DEXB.BR -0.0034 0.027 -0.0836 0.0748 0.005 TM2.F 0.0 0.0121 -0.0336 0.034 0.0031 IL0A.IR -0.0003 0.044 -0.1212 0.1226 0.0017 SAB1L.VS -0.0005 0.0105 -0.0294 0.029 0.0009 Open in new tab Table A.4 Descriptive statistics: daily returns—pure issuers Variable . Mean . SD . Min . Max . Cap % . HSBA.L -0.0002 0.0122 -0.0334 0.0331 0.4739 BSD2.DE -0.0003 0.0186 -0.0513 0.0507 0.2098 RBS.L -0.0007 0.0232 -0.0615 0.0608 0.0972 KBC.BR -0.0001 0.0238 -0.0672 0.0675 0.0796 CABK.MC 0.0 0.0164 -0.0432 0.0435 0.0432 CBK.DE -0.0012 0.0227 -0.0634 0.0611 0.0258 BKT.MC -0.0006 0.0205 -0.0542 0.0543 0.0175 OBS.VI 0.0 0.0 -0.0001 0.0002 0.0107 UBI.MI -0.0007 0.0212 -0.0575 0.0567 0.0087 BAMI.MI -0.0015 0.0249 -0.0699 0.0671 0.0083 JYS1.F -0.0002 0.0106 -0.0292 0.0292 0.0073 ETE.AT -0.0021 0.0353 -0.1024 0.0959 0.0072 DEXB.BR -0.0034 0.027 -0.0836 0.0748 0.005 TM2.F 0.0 0.0121 -0.0336 0.034 0.0031 IL0A.IR -0.0003 0.044 -0.1212 0.1226 0.0017 SAB1L.VS -0.0005 0.0105 -0.0294 0.029 0.0009 Variable . Mean . SD . Min . Max . Cap % . HSBA.L -0.0002 0.0122 -0.0334 0.0331 0.4739 BSD2.DE -0.0003 0.0186 -0.0513 0.0507 0.2098 RBS.L -0.0007 0.0232 -0.0615 0.0608 0.0972 KBC.BR -0.0001 0.0238 -0.0672 0.0675 0.0796 CABK.MC 0.0 0.0164 -0.0432 0.0435 0.0432 CBK.DE -0.0012 0.0227 -0.0634 0.0611 0.0258 BKT.MC -0.0006 0.0205 -0.0542 0.0543 0.0175 OBS.VI 0.0 0.0 -0.0001 0.0002 0.0107 UBI.MI -0.0007 0.0212 -0.0575 0.0567 0.0087 BAMI.MI -0.0015 0.0249 -0.0699 0.0671 0.0083 JYS1.F -0.0002 0.0106 -0.0292 0.0292 0.0073 ETE.AT -0.0021 0.0353 -0.1024 0.0959 0.0072 DEXB.BR -0.0034 0.027 -0.0836 0.0748 0.005 TM2.F 0.0 0.0121 -0.0336 0.034 0.0031 IL0A.IR -0.0003 0.044 -0.1212 0.1226 0.0017 SAB1L.VS -0.0005 0.0105 -0.0294 0.029 0.0009 Open in new tab Table A.5 Descriptive statistics: daily returns—retailers Variable . Mean . SD . Min . Max . Cap % . MOH.DE 0.0002 0.015 -0.0399 0.0399 0.3361 IXD1.F 0.0003 0.0144 -0.0383 0.0397 0.1494 RMS.PA 0.0005 0.0137 -0.0367 0.0385 0.1168 KER.PA -0.0002 0.0149 -0.0419 0.0414 0.103 ADS.DE 0.0003 0.0143 -0.0386 0.0392 0.1002 TSCO.L -0.0005 0.0122 -0.0341 0.0332 0.0426 AD.AS 0.0007 0.008 -0.0215 0.0225 0.0392 CA.PA -0.0003 0.0158 -0.0427 0.0427 0.0243 JEM.F -0.0 0.0136 -0.037 0.0381 0.0159 NXG.F 0.0002 0.0132 -0.0346 0.0357 0.0135 KEK.F 0.0004 0.0111 -0.0299 0.0305 0.0092 SUY1.F -0.0007 0.0142 -0.0372 0.0364 0.0085 KGF.L 0.0006 0.0153 -0.0411 0.042 0.0082 MA6.F -0.0009 0.0159 -0.0428 0.0415 0.0078 DUFN.SW -0.0 0.0153 -0.0416 0.042 0.0064 CAJ.F 0.0001 0.0095 -0.0259 0.0255 0.0061 HMSB.F 0.0004 0.0119 -0.0317 0.0324 0.0047 SON.LS -0.0003 0.0159 -0.0424 0.0425 0.0028 GAW.L 0.0001 0.007 -0.0205 0.0207 0.0025 SPD.L 0.0011 0.0175 -0.0472 0.0492 0.0021 HFD.L -0.0001 0.0147 -0.0396 0.04 0.0008 Variable . Mean . SD . Min . Max . Cap % . MOH.DE 0.0002 0.015 -0.0399 0.0399 0.3361 IXD1.F 0.0003 0.0144 -0.0383 0.0397 0.1494 RMS.PA 0.0005 0.0137 -0.0367 0.0385 0.1168 KER.PA -0.0002 0.0149 -0.0419 0.0414 0.103 ADS.DE 0.0003 0.0143 -0.0386 0.0392 0.1002 TSCO.L -0.0005 0.0122 -0.0341 0.0332 0.0426 AD.AS 0.0007 0.008 -0.0215 0.0225 0.0392 CA.PA -0.0003 0.0158 -0.0427 0.0427 0.0243 JEM.F -0.0 0.0136 -0.037 0.0381 0.0159 NXG.F 0.0002 0.0132 -0.0346 0.0357 0.0135 KEK.F 0.0004 0.0111 -0.0299 0.0305 0.0092 SUY1.F -0.0007 0.0142 -0.0372 0.0364 0.0085 KGF.L 0.0006 0.0153 -0.0411 0.042 0.0082 MA6.F -0.0009 0.0159 -0.0428 0.0415 0.0078 DUFN.SW -0.0 0.0153 -0.0416 0.042 0.0064 CAJ.F 0.0001 0.0095 -0.0259 0.0255 0.0061 HMSB.F 0.0004 0.0119 -0.0317 0.0324 0.0047 SON.LS -0.0003 0.0159 -0.0424 0.0425 0.0028 GAW.L 0.0001 0.007 -0.0205 0.0207 0.0025 SPD.L 0.0011 0.0175 -0.0472 0.0492 0.0021 HFD.L -0.0001 0.0147 -0.0396 0.04 0.0008 Open in new tab Table A.5 Descriptive statistics: daily returns—retailers Variable . Mean . SD . Min . Max . Cap % . MOH.DE 0.0002 0.015 -0.0399 0.0399 0.3361 IXD1.F 0.0003 0.0144 -0.0383 0.0397 0.1494 RMS.PA 0.0005 0.0137 -0.0367 0.0385 0.1168 KER.PA -0.0002 0.0149 -0.0419 0.0414 0.103 ADS.DE 0.0003 0.0143 -0.0386 0.0392 0.1002 TSCO.L -0.0005 0.0122 -0.0341 0.0332 0.0426 AD.AS 0.0007 0.008 -0.0215 0.0225 0.0392 CA.PA -0.0003 0.0158 -0.0427 0.0427 0.0243 JEM.F -0.0 0.0136 -0.037 0.0381 0.0159 NXG.F 0.0002 0.0132 -0.0346 0.0357 0.0135 KEK.F 0.0004 0.0111 -0.0299 0.0305 0.0092 SUY1.F -0.0007 0.0142 -0.0372 0.0364 0.0085 KGF.L 0.0006 0.0153 -0.0411 0.042 0.0082 MA6.F -0.0009 0.0159 -0.0428 0.0415 0.0078 DUFN.SW -0.0 0.0153 -0.0416 0.042 0.0064 CAJ.F 0.0001 0.0095 -0.0259 0.0255 0.0061 HMSB.F 0.0004 0.0119 -0.0317 0.0324 0.0047 SON.LS -0.0003 0.0159 -0.0424 0.0425 0.0028 GAW.L 0.0001 0.007 -0.0205 0.0207 0.0025 SPD.L 0.0011 0.0175 -0.0472 0.0492 0.0021 HFD.L -0.0001 0.0147 -0.0396 0.04 0.0008 Variable . Mean . SD . Min . Max . Cap % . MOH.DE 0.0002 0.015 -0.0399 0.0399 0.3361 IXD1.F 0.0003 0.0144 -0.0383 0.0397 0.1494 RMS.PA 0.0005 0.0137 -0.0367 0.0385 0.1168 KER.PA -0.0002 0.0149 -0.0419 0.0414 0.103 ADS.DE 0.0003 0.0143 -0.0386 0.0392 0.1002 TSCO.L -0.0005 0.0122 -0.0341 0.0332 0.0426 AD.AS 0.0007 0.008 -0.0215 0.0225 0.0392 CA.PA -0.0003 0.0158 -0.0427 0.0427 0.0243 JEM.F -0.0 0.0136 -0.037 0.0381 0.0159 NXG.F 0.0002 0.0132 -0.0346 0.0357 0.0135 KEK.F 0.0004 0.0111 -0.0299 0.0305 0.0092 SUY1.F -0.0007 0.0142 -0.0372 0.0364 0.0085 KGF.L 0.0006 0.0153 -0.0411 0.042 0.0082 MA6.F -0.0009 0.0159 -0.0428 0.0415 0.0078 DUFN.SW -0.0 0.0153 -0.0416 0.042 0.0064 CAJ.F 0.0001 0.0095 -0.0259 0.0255 0.0061 HMSB.F 0.0004 0.0119 -0.0317 0.0324 0.0047 SON.LS -0.0003 0.0159 -0.0424 0.0425 0.0028 GAW.L 0.0001 0.007 -0.0205 0.0207 0.0025 SPD.L 0.0011 0.0175 -0.0472 0.0492 0.0021 HFD.L -0.0001 0.0147 -0.0396 0.04 0.0008 Open in new tab Footnotes 1 Council of the European Union and European Parliament. 2005. Regulation (EU) 2015/751 of the European Parliament and of the Council of 29 April 2015 on Interchange Fees for Card-based Payment Transactions, Official Journal of the European Union, 123, pp. 1–15. <https://publications.europa.eu/en/publication-detail/-/publication/62bab217-fdf3-11e4-a4c8-01aa75ed71a1> accessed 1 January 2020. 2 A comprehensive overview of initiated investigations and actions taken by public authorities in card payment markets globally can be found in F. Hayashi & J.L. Maniff. 2018. Public Authority Involvement in Payment Card Markets: Various Countries: August 2018 Update <https://www.kansascityfed.org/media/files/publicat/psr/dataset/pub-auth_payments_var_countries_august2018.pdf> accessed 1 January 2020. 3 European Commission. 2013. Proposal for a Regulation of the European Parliament and of the Council on interchange fees for Card-based Payment Transactions <https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2013:0550:FIN:EN:PDF> accessed 1 January 2020. 4 The words merchant(s) and retailer(s) are used interchangeably within this article. While the regulation impacted a vast range of market participants, this paper focuses mainly on business-to-consumer retailers as these would have observed a disproportionately larger impact resulting from the regulation. 5 Council of the European Union and European Parliament. 2015. Regulation (EU) 2015/751 of the European Parliament and of the Council of 29 April 2015 on interchange fees for card-based payment transactions, Official Journal of the European Union, 123, pp. 1–15. <https://publications.europa.eu/en/publication-detail/-/publication/62bab217-fdf3-11e4-a4c8-01aa75ed71a1> accessed 1 January 2020. 6 For further information on Regulatory Impact Analysis, see OECD. 2019. Regulatory Impact Analysis <https://www.oecd.org/regreform/regulatory-policy/ria.htm> accessed 2 January 2020. 7 Article 17 of the IFR further stipulates the analysis of six other areas to a lesser extent. These are: technical requirements, co-badging, special provisions for interchange fees for domestic debit card transactions, cross-border acquiring, separation of card schemes and processing, and interchange fees for medium and high value debit card transactions. 8 Deloitte estimates total losses of 3.7 billion Euro for issuers in seven major EU markets (Spain, France, Germany, Italy, United Kingdom, Netherlands, and Poland) directly resulting from the regulation. Deloitte LLP. 2015. Payments disrupted - The emerging challenge for European retail banks. <https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/financial-services/deloitte-uk-payments-disrupted-2015.pdf> accessed 1 January 2020. 9 A. Veljan. 2018. A Critical Review of the European Commission’s Multilateral Interchange Fee Regulation, Journal of Payments Strategy & Systems, 12(3), pp. 232–244. 10 European Commission. 2020. Study on the Application of the Interchange Fee Regulation <https://ec.europa.eu/competition/publications/reports/kd0120161enn.pdf> accessed 24 April 2020. 11 A. Veljan. 2020. Influence of Intra-and Inter-system Concentration on the Pre-regulated Setting of Interchange Fees Within Cooperative Card Payment Networks, Journal of Banking Regulation 21, pp. 139–151. 12 European Commission. 2020. Study on the application of the Interchange Fee Regulation <https://ec.europa.eu/competition/publications/reports/kd0120161enn.pdf> accessed 24 April 2020. 13 European Commission. 2015. Survey on merchants’ costs of processing cash and card payments <http://ec.europa.eu/competition/sectors/financial_services/dgcomp_final_report_en.pdf> accessed 1 January 2020. 14 These findings are derived from A. Veljan. 2018. A Critical Review of the European Commission’s Multilateral Interchange Fee Regulation, Journal of Payments Strategy & Systems, 12(3). By building a data set on national interchange fees and card processing volumes in a pre- and post-regulatory environment, the paper finds that for issuing losses to be compensated fully within a twelve-month period, given the stipulated interchange fees for debit (0.2 percent) and credit (0.3 percent) cards, issuers would need to process on average 80 percent more card volume. 15 European Central Bank. 2019. Statistical Data Warehouse: Payments Statistics [full report] <http://sdw.ecb.europa.eu/reports.do?node=1000004051> accessed 1 January 2020. 16 Deutsche Kreditwirtschaft. 2013. Position on the Proposal for a Regulation of the European Parliament and of the Council on interchange fees for card-based payment transactions <https://die-dk.de/ media/files/GBIC_Position_MIF_EN_20131212_ dPNf1id_r8YBDbt.pdf> accessed 2 January 2020. 17 Mastercard Inc. 2019. Annual Reports <https://investor.mastercard.com/investor-relations/financials-and-sec-filings/annual-reports/default.aspx> accessed 1 January 2020. Visa Inc. 2020. Financial Information <https://investor.visa.com/financial-information/quarterly-earnings/default.aspx> accessed 1 January 2020. 18 A. Veljan. 2020. Regulating the Uncontrollable: The Development of Card Scheme Fees in Payments Markets in Light of Recent Policy Intervention, Research in Law and Economics, Vol. 29, forthcoming. 19 European Commission. 2020. Study on the application of the Interchange Fee Regulation <https://ec.europa.eu/competition/publications/reports/kd0120161enn.pdf> accessed 24 April 2020. 20 A. Veljan. 2020. Regulating the Uncontrollable: The Development of Card Scheme Fees in Payments Markets in Light of Recent Policy Intervention, Research in Law and Economics, Vol. 29, forthcoming. 21 C. Godwin. 2018. Payments Intelligence extract: scheme fee increases, another uphill battle for merchants <https://cmspi.com/eur/blogs/payments-intelligence-extract-scheme-fee-increases-another-uphill-battle-for-merchants/> accessed 1 January 2020. 22 European Commission. 2020. Study on the application of the Interchange Fee Regulation <https://ec.europa.eu/competition/publications/reports/kd0120161enn.pdf> accessed 24 April 2020. 23 See also European Commission. 2020. Study on the application of the Interchange Fee Regulation <https://ec.europa.eu/competition/publications/reports/kd0120161enn.pdf> accessed 24 April 2020. The EC primarily derives pass-through rates from a meta-study and complements findings with interviews; whereby risks and potential pitfalls of both techniques are acknowledged. 24 The Payment Systems Regulator. 2018. Market review into the supply of card-acquiring services: Draft Terms of Reference. <https://www.psr.org.uk/psr-publications/consultations/mr18_1.1_draft_tor_card_aquiring_services> (accessed 1 January 2020) initiated a market review into the supply of card-acquiring services in the United Kingdom, covering among others topics such as transparency of reporting and pass-through towards merchants. 25 Interchange fees, scheme fees, and acquirer processing fees all form part of the MSC or discount rate charged towards the merchant. While interchange fees historically accounted for the vast majority of costs, scheme fees have been growing rapidly in recent times. Merchants and their representative bodies have been vocal about the fact that scheme fees continue to reduce the financial benefits of the IFR. See A. Veljan. 2020. Regulating the Uncontrollable: The Development of Card Scheme Fees in Payments Markets in Light of Recent Policy Intervention, Research in Law and Economics for further insights. Vol. 29, forthcoming. 26 P. Jones. 2017. 18 months on - Impact of the Interchange Fee Regulation on the European Union cards market, European Payments Council AISBL <https://www.europeanpaymentscouncil.eu/news-insights/insight/18-months-impact-interchange-fee-regulation-european-union-cards-market> accessed 2 January 2020. 27 R.J. Shapiro. 2013. The Costs and Benefits of Half a Loaf: The Economic Effects of Recent Regulation of Debit Card Interchange Fees <https://www.sonecon.com/docs/studies/Report_on_Interchange_Fees-RShapiro-October_2013.pdf> accessed 2 January 2020. 28 D.S. Evans, H.H. Chang, & S. Joyce. 2015. ‘The Impact of the U.S. Debit Card Interchange Fee Regulation on Consumer Welfare, Journal of Competition Law & Economics, 11(1), pp. 23–67. assess pass-through rates on both sides of the network when determining the impact of the Debit Card Interchange Fee Regulation in the United States on consumer welfare. 29 European Commission. 2018. Call for Tenders: Support Study on the application of the Interchange Fee Regulation <https://etendering.ted.europa.eu/cft/cft-documents.html;eTenderingPublic=IGxqS230tcOABWg0RX-bp0HFNIGJN17Zwuk7R1EETydrxAYndvrt!1739191041?cftId=3319> accessed 2 January 2020. 30 M.L. Katz & C. Shapiro. 1994. Systems Competition and Network Effects, Journal of Economic Perspectives, 8(3). 31 W. Bolt & S. Chakravorti. 2008. Economics of payment cards: A status report, DNB Working Papers No. 193 survey theoretical literature on payment cards. For further information see also R.A. Prager, M.D. Manuszak, E.K. Kiser, R. Borzekowski. 2009. Interchange Fees and Payment Card Networks: Economics, Industry Developments, and Policy Issues, Finance and Economics Discussion Series No. 23. 32 J.-C. Rochet & J. Tirole, ‘Platform competition in two-sided markets’ (2003) Journal of the European Economic Association Vol. 1, No. 4. 33 W.F. Baxter. 1983. Bank Interchange of Transactional Paper: Legal and Economic Perspectives, The Journal of Law and Economics, 26(3). 34 J. Wright. 2004. The Determinants of Optimal Interchange Fees in Payment Systems, Journal of Industrial Economics, 52(1), pp. 1–26. 35 R. Schmalensee. 2002. Payment Systems and Interchange Fees, The Journal of Industrial Economics, 50(2), pp. 103–122. 36 J.-C. Rochet & J. Tirole. 2006. Two-Sided Markets: A Progress Report, The RAND Journal of Economics, 37(3), pp. 645–667. 37 A. Börestam & H. Schmiedel. 2011. Interchange fees in card payments, Occasional Paper Series No. 131 <https://www.ecb.europa.eu/pub/pdf/scpops/ecbocp131.pdf> accessed 1 December 2018. 38 J. Vickers. 2005. Public Policy and the Invisible Price: Competition Law, Regulation, and the Interchange Fee, Competition Law Journal 4, pp. 5–21. 39 J.-C. Rochet & J. Tirole. 2002. Cooperation among Competitors: Some Economics of Payment Card Associations, The RAND Journal of Economics, 33(4). 40 Mastercard Inc. 2019. What We Do <https://www.mastercard.us/en-us/about-mastercard/what-we-do.html> accessed 2 January 2020. Visa Inc. 2020. About Visa <https://www.visa.co.uk/about-visa.html> accessed 2 January 2020. 41 G. Guthrie & J. Wright. 2007. Competing Payment Schemes, The Journal of Industrial Economics, 55(1), pp. 37–67 present a model of competing payment schemes and address implications for other two-sided markets. The rationale of inflated interchange fees and finally MSC lies in the inherent dysfunctionality related to card scheme competition for card issuers. While common rationale would suggest decreasing prices with increasing scheme competition, within payment markets a monopolistic card association would actually set interchange fees lower than a competing card association. For further background see also European Commission. 2020. Study on the application of the Interchange Fee Regulation, pp. 1–318. <https://ec.europa.eu/competition/publications/reports/kd0120161enn.pdf> accessed 24 April 2020. 42 Mastercard Inc. 2019. Interchange <https://www.mastercard.co.uk/content/dam/mccom/en-gb/interchange/documents/Germany.pdf> accessed 2 January 2020. 43 SIX Payment Services. 2019. Scheme Fees <https://www.six-payment-services.com/dam/classic/downloads/scheme-fees/Scheme-Fees-Germany.pdf> accessed 2 January 2020. 44 European Commission. 2015. Survey on merchants’ costs of processing cash and card payments <http://ec.europa.eu/competition/sectors/financial_services/dgcomp_final_report_en.pdf> accessed 2 January 2020. 45 S.E. Weiner & J. Wright. 2005. Interchange Fees in Various Countries: Developments and Determinants. Review of Network Economics, 4(4), pp. 290–323. 46 A. Veljan. 2018. Influence of Intra-and Inter-system Concentration on the Pre-regulated Setting of Interchange Fees Within Cooperative Card Payment Networks, Journal of Banking Regulation 21, pp. 139–151. Given that historically commercial banks tended to have their own acquiring businesses and the fact that banks continue to be heavily involved in the card acquiring business, the majority of consolidation within the acquiring market will have a financial impact on the card issuing market. In 2018, over 70 M&A deals took place within the global payment space, amounting to a transaction value of 29.4 billion Euro. During the first quarter of 2019 transactions amounted to 87.1 billion Euro already. See Ernst & Young Global Limited. 2019. Three M&A waves reshaping the banking payments acceptance segment, Payments, 23, pp. 10–11. <https://assets.ey.com/content/dam/ey-sites/ey-com/en_gl/topics/banking-and-capital-markets/ey-global-banking-and-capital-markets-global-payments-newsletter-volume-23-final.pdf> accessed 25 April 2020. 47 J.C. Dolley. 1933. Characteristics and Procedure of Common Stock Split-Ups, Harvard Business Review, 11, pp. 316–326. 48 E.F. Fama, L. Fisher, M. C. Jensen, R. Roll. 1969. The Adjustment of Stock Prices to New Information, International Economic Review, 10(1), pp. 1–21. 49 E.F. Fama. 1970 Efficient Capital Markets: A Review of Theory and Empirical Work, The Journal of Finance, 25(2), pp. 383–417. 50 J.J. Binder. 1998. The Event Study Methodology Since 1969, Review of Quantitative Finance and Accounting, 11, pp. 111–137. 51 A.C. MacKinlay. 1997. Event Studies in Economics and Finance, Journal of Economic Literature, 35, pp. 13–39. 52 D.I. Tabak & F.C. Dunbar. 1999. Materiality and Magnitude: Event Studies in the Courtroom, National Economic Research Associates No. 34. 53 See among others J.B. Bushnell, H. Chong, E.T. Mansur. 2009. Profiting from Regulation: An Event Study of the European Carbon Market, American Economic Association, pp. 1–36. <https://www.aeaweb.org/conference/2010/retrieve.php?pdfid=74> accessed 4 January 2020; F. Loipersberger. 2017. The Effect of Supranational Banking Supervision on the Financial Sector: Event Study Evidence from Europe, pp. 1–30. <https://epub.ub.uni-muenchen.de/34610/1/discussion_paper_banks.pdf> accessed 4 January 2020 and M. Mateev & K. Andonov. 2018. Do European bidders pay more in cross-border than in domestic acquisitions? New evidence from Continental Europe and the UK, Research in International Business and Finance, 45, pp. 529–556. 54 L. Müller. 2015. Proving Causation with an Event Study in Capital Markets Law, Aktuelle Juristische Praxis, 24, pp. 251–268. 55 As a rule, hypothesis tests of an empirical nature require a minimum statistical significance of 95 percent. 56 Council of the European Union and European Parliament. 2015. Regulation (EU) 2015/751 of the European Parliament and of the Council of 29 April 2015 on interchange fees for card-based payment transactions, Official Journal of the European Union, 123, pp. 1–15. <https://publications.europa.eu/en/publication-detail/-/publication/62bab217-fdf3-11e4-a4c8-01aa75ed71a1> accessed 1 January 2020. 57 EUR-Lex. 2015. Document 32015R0751 <https://eur-lex.europa.eu/legal-content/EN/HIS/?uri=CELEX:32015R0751> accessed 12 January 2020. 58 A. Veljan. 2020. Regulating the Uncontrollable: The Development of Card Scheme Fees in Payments Markets in Light of Recent Policy Intervention, Research in Law and Economics Vol. 29, forthcoming. 59 European Union. 2012. Consolidated Version of the Treaty on the Functioning of the European Union <https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:12012E/TXT&#x0026;from=EN> accessed 12 January 2020. 60 The Wall Street Journal. 2000. EU Objects to Fees on Retailers Charged by Visa International <https://www.wsj.com/articles/SB971697634627171391?mod=searchresults&page=13&pos=19> accessed 12 January 2020. 61 G. Langus, M. Motta, L. Aguzzoni. 2010. The effect of EU antitrust investigations and fines on a firm’s valuation <http://ftp.zew.de/pub/zew-docs/veranstaltungen/Macci/SummerInstitute/Papers/SI_Motta.pdf> accessed 13 January 2020. 62 U.S. Government Accountability Office. 2009. GAO-10-45 Credit Cards: Rising Interchange Fees Have Increased Costs for Merchants, but Options for Reducing Fees Pose Challenges <https://www.gao.gov/assets/300/298664.pdf> accessed 13 January 2020. 63 Y. Konchitchki & D.E. O’Leary. 2011. Event Study Methodologies in Information Systems Research, International Journal of Accounting Information Systems, 12, pp. 99–115. 64 The initial composition of events is based on the publicly accessible outline of regulatory procedure by the regulator. See EUR-Lex. 2015. Document 32015R0751 <https://eur-lex.europa.eu/legalcontent/EN/HIS/?uri=CELEX:32015R0751> accessed 12 January 2020 for further information. These findings are enriched by means of a systematic literature review within the data bases of prominent media sources. Expert interviews are conducted with random representatives from regulatory bodies, retail trade representations, and global merchants with the aim of identifying further (hidden) events, potential information leakage as well as assessing robustness of preliminary sample. Preliminary statistical analyses are conducted to assess the volatility of key metrics (including stock returns) during the selected period. This approach ensures the identification of any initially missed distinct event dates. Based on the extent of media coverage, inclusiveness of any figures (this is key in order for investors to assess potential impact on revenues and incorporate this in security prices) and causality, especially preceding and succeeding occurrences) key event dates are identified. 65 For instance, on 24 August 2015, a stock market crash impacted security prices globally. See Business Insider. 2015. Market Mayhem <https://www.businessinsider.com/us-markets-sell-off-aug-24-2015-2015-8?r=DE&IR=T> accessed 20 January 2020 and R. Foroohar. 2015. ‘4 New Truths from the Stock Market Crisis of 2015, TIME USA, LLC <https://time.com/4008762/stock-market/> accessed 20 January 2020. This and similar events would need to be accounted for and dealt with accordingly within the analysis. 66 See Tables A.3-A.5 within Appendix for full list including descriptive statistics. Issuers are classified as firms engaged in issuing and acquiring services simultaneously, while pure issuers are classified as firms without an operational or ownership engagement in acquiring markets. While the sample is not representative for smaller firms across the three industries (large firms are over-represented), the sample size can be considered material given total market capitalization of each group. 67 HSN Consultants, Inc. 2016. Europe’s Top Acquirers, THE NILSON REPORT Issue 1087 and HSN Consultants, Inc. 2016. Europe’s 50 Largest Debit & Credit Card Issuers, THE NILSON REPORT Issue 1089. 68 Global Data Plc. 2018. Timetric <https://www.globaldata.com/timetric/> accessed 26 April 2020. 69 Deloitte. 2017. Global Powers of Retailing. <https://www2.deloitte.com/content/dam/Deloitte/global/Documents/consumer-industrial-products/gx-cip-2017-global-powers-of-retailing.pdf> accessed 26 April 2020. 70 Verizon Media. 2020. Yahoo! Finance <https://finance.yahoo.com/> accessed 22 January 2020. 71 STOXX Ltd. 2020. Euro Stoxx 50 <https://www.stoxx.com/index-details?symbol=sx5e> accessed 22 January 2020. 72 Information presented in this section relates to final results obtained via the preferred (and deemed most suitable) econometric model. For the sake of robustness, several models (market model versus constant mean return model; OLS versus WLS regression) are tested and the analysis amended (event window adapted from a single day to |$[-1;+1]$|⁠, |$[-2;+2]$|⁠, and |$[-15;+15]$|⁠). While results are consistent with regard to the different models deployed, an extension of the event window has not resulted in the identification of any other significant event dates. For further discussion on the selection of event windows see K.R. Ahern. 2009. Sample Selection and Event Study Estimation, Journal of Empirical Finance, 16(3) and E.F. Fama. 1997. Market Efficiency, Long-Term Returns, and Behavioral Finance <http://dx.doi.org/10.2139/ssrn.15108> accessed 27 April 2020. 73 Y. Konchitchki & D.E. O’Leary. 2011. Event Study Methodologies in Information Systems Research, International Journal of Accounting Information Systems, 12, pp. 99–115. 74 In line with J.J. Binder. 1998. The Event Study Methodology Since 1969, Review of Quantitative Finance and Accounting, 11, pp. 111–137. For each event, a separate data set of 250 records (one trading year) is deemed sufficiently large for the regression model to make robust estimations. Increasing the estimation window for multiple years could lead to misleading results, among others by increasing the likelihood of confounding factors leading to increased volatility of the stocks, especially during an economic environment as prevalent in the period 2008–2009, pp. 186–192. See also T. Duso, K. Gugler, B. Yurtoglu. 2010. Is the event study methodology useful for merger analysis? A comparison of stock market and accounting data, International Review of Law and Economics, 30 who use a 240 day estimation period. 75 A.C. MacKinlay. 1997. Event Studies in Economics and Finance, Journal of Economic Literature, 35, pp. 13–39. 76 For the sake of robustness, a comparative analysis is run using the constant mean return model. Comparable results are obtained. 77 S.J. Brown & J.B. Warner. 1985. Using Daily Stock Returns: The Case of Event Studies, Journal of Financial Economics, 14, pp. 3–31. 78 Y. Konchitchki & D.E. O’Leary. 2011. Event Study Methodologies in Information Systems Research, International Journal of Accounting Information Systems, 12, pp. 99–115. 79 S.J. Brown & J.B. Warner. 1985. Using Daily Stock Returns: The Case of Event Studies, Journal of Financial Economics, 14, pp. 3–31. 80 A.F. Hayes & L. Cai. 2007. Using Heteroskedasticity-consistent Standard Error Estimators in OLS Regression: An Introduction and Software Implementation, Behavior Research Methods, 39(4), pp. 709–722. 81 While a relatively significant rise in CAAR can be observed for issuers and pure issuers preceding the event, there does not seem to be sufficient evidence that would hint towards information leakage/ delay of such an extent. For one, a large degree of volatility can be observed prior to the (rise on the) event (several smaller and a more significant decrease on 30 March), for the other CAAR stabilizes post-event for several days before continuing its momentum. Thus, findings may be impacted and or exaggerated (see phenomenon of irrational exuberance) by an overall recovering, albeit unstable economic environment for the sector as a whole. 82 Assuming regulatory compliance, every acquiring bank will reap the full benefits of the IFR. In a two-staged game every acquirer will then decide if and to what extent to pass-these savings on to merchants (stage 1), which will subsequently each decide on pass-through towards consumers (stage 2). From this, a total of seven pass-through scenarios towards consumers can be derived. 83 The analysed portfolio within this article accounts for 44.5 percent of the market capitalization of the top 100 European retailers in 2009. Figures for merchants are thus expressed as industry-wide metrics. Data is based on PricewaterhouseCoopers AG. 2015. Top 100 Companies: Retail and Consumer by market capitalisation <https://www.pwc.de/de/handel-und-konsumguter/assets/pwc-analyse-top-100-2015.pdf> accessed 26 January 2020. 84 The total, daily market capitalization is determined as a product of stock price and the number of outstanding shares for each firm within the three groups. The absolute increase in market capitalization, representing the net present value of future expectations, is determined as the difference between the total capitalization on the event day and the previous day; the same is true for the relative figures. 85 Calculation based on A. Veljan. 2018. A Critical Review of the European Commission’s Multilateral Interchange Fee Regulation, Journal of Payments Strategy & Systems, 12(3) and European Central Bank. 2020. Statistical Data Warehouse <http://sdw.ecb.europa.eu/home.do> accessed 21 January 2020. 86 Calculation based on a time period of ten years. Discount rate of 20 percent applied based on the yearly performance of Euro Stoxx 50 index for 2009. See Finanzen.Net GmbH. 2020. Euro Stoxx 50 <https://www.finanzen.net/index/euro_stoxx_50/historisch> accessed 21 January 2020. 87 Assuming investor expectation within the issuing market was that interchange fees would be abolished an immediate revenue loss of 8.8 billion Euro (equal to 46 billion Euro in NPV or total losses in the long run) would be realized by issuers. Given that interchange fees were not abolished and actually merely reduced resulting in estimated losses between 4.6 and 4.7 billion Euro, this caused an unexpected uplift in the NPV and future revenue expectations of 22 billion Euro. Thus, although issuers suffered an immediate net loss between 4.6 and 4.7 billion Euro on the event day, given that the market expectation was that this loss would be as high as 8.8 billion Euro (this being already incorporated in the stock prices), an increase in market capitalization on the event day for both issuers and pure issuers is not contradictory perse. 88 Assuming regulatory compliance, any interchange fee reductions would be immediately passed through from issuers to acquirers. Thus, any issuer losses de-facto have to equal acquirer benefits; in this case resulting in immediate acquirer revenues of 4.7 billion Euro (due to rounding) or a NPV increase of 24 billion Euro. Our findings show that market capitalization for retailers has increased by 11.2 billion Euro. As stated previously, in order to determine the ultimate consumer benefit an empirical analysis of the development in market capitalization within the acquiring market is essential. Given the increase in market capitalization of the retail industry, consumer benefits directly related to the IFR can be estimated between 0 and 12.8 billion Euro, depending on actual pass-through rates within acquiring and retailing markets. 89 For the avoidance of doubt, findings of this paper are not suggesting that issuers (or their revenue position) benefited from the IFR. Issuers as well as pure issuers suffered revenue losses as a direct consequence of the regulation. These losses, however, were less than what investors expected and as such resulted in a positive uplift of market capitalization. 90 See for instance D.S. Evans, H.H. Chang, & S. Joyce. 2015. The Impact of the U.S. Debit Card Interchange Fee Regulation on Consumer Welfare, Journal of Competition Law & Economics, 11(1), whereby it is noteworthy that the historical setting as well as the phase preceding the regulation are not comparable with the European card payment landscape. 91 A. Veljan. 2020. Regulating the Uncontrollable: The Development of Card Scheme Fees in Payments Markets in Light of Recent Policy Intervention, Research in Law and Economics, Vol. 29, forthcoming. 92 A.D. Matteis. 2014. The European Court of Justice Has Ruled that Interchange Fees Are Permitted if They Provide Benefits to Merchants. What are the Implications of the MasterCard Judgment for Interchange Fees in Europe?, European Payments Council Newsletter <https://www.europeanpaymentscouncil.eu/index.cfm/newsletter/article/?articles_uuid=566082C2-5056-B741-DB7B977A89660A8E> accessed 27 April 2020. 93 M. Jacoby. 2006. MasterCard Could Lose Role in Setting Bank Fees in the EU, The Wall Street Journal <https://www.wsj.com/articles/SB115165752783495232?mod=searchresults&#x0026;=12&#x0026;=2> accessed 21 January 2020. 94 L. Pollock. 2008. MasterCard Europe Suspends Fees, The Wall Street Journal <https://www.wsj.com/articles/SB121328413190568169?mod=searchresults&page=10&pos=13> accessed 21 January 2020. 95 N. Kroes. 2008. Antitrust: Commission notes MasterCard’s decision to temporarily repeal its cross-border Multilateral Interchange Fees within the EEA, European Commission <https://ec.europa.eu/commission/presscorner/detail/en/MEMO_08_397> accessed 21 January 2020. 96 See Financial Times. 2009. Mastercard agrees to cut fees in Europe <https://www.ft.com/content/38392aaa-1eac-11de-b244-00144feabdc0> accessed 21 January 2020 and C. Forelle. 2009. MasterCard to Cut Fees in EU Pact, The Wall Street Journal <https://www.wsj.com/articles/SB123857984966477741?mod=searchresults&#x0026;page=10&#x0026;pos=12> accessed 21 January 2020. 97 See Financial Times. 2009. Visa Europe charged with breaching rules <https://www.ft.com/content/f23d264e-22b3-11de-9c99-00144feabdc0> accessed 21 January 2020 and M. Dalton & P. Kiviniemi. 2009. EU Charges Visa Over Fees, The Wall Street Journal <https://www.wsj.com/articles/SB123902543327292827?mod=searchresults&page=10&pos=10> accessed 21 January 2020. 98 EuroCommerce. 2020. About Us <https://www.eurocommerce.eu/about-us.aspx> accessed 21 January 2020. 99 European Union. 2019. Summary of Commission Decision of 19 December 2007 relating to a proceeding under Article 81 of the EC Treaty and Article 53 of the EEA Agreement, Official Journal of the European Union, 264, pp. 8–11. <https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2009:264:0008:0011:EN:PDF> accessed 21 January 2020. 100 D.S. Evans, H.H. Chang, & S. Joyce. 2015. ‘ The Impact of the U.S. Debit Card Interchange Fee Regulation on Consumer Welfare, Journal of Competition Law & Economics, 11(1), pp. 23–67. 101 See also European Commission. 2020. Study on the application of the Interchange Fee Regulation <https://ec.europa.eu/competition/publications/reports/kd0120161enn.pdf> accessed 24 April 2020 for further discussion on the complexities of price formation within the retail sector. 102 A. Veljan. 2020. Regulating the Uncontrollable: The Development of Card Scheme Fees in Payments Markets in Light of Recent Policy Intervention, Research in Law and Economics, Vol. 29, forthcoming. 103 European Commission. 2013. Commission Staff Working Document Impact Assessment <https://eur-lex.europa.eu/resource.html?uri=cellar:906ed6d3-f509-11e2-a22e-01aa75ed71a1.0001.04/DOC_1&#x0026;format=PDF> accessed 26 January 2020. 104 D.S. Evans, H.H. Chang, & S. Joyce. 2015. ‘The Impact of the U.S. Debit Card Interchange Fee Regulation on Consumer Welfare, Journal of Competition Law & Economics, 11(1) investigate the impact on the U.S. debit card interchange fee regulation on consumer welfare. While the methodological approach is comparable with regard to the event study, the paper pre-selects two contradicting events (rather than testing multiple events for significance) within the regulatory process and assesses the impact. Also, acquirer pass-through is assumed at 100 percent, with a focus on determining consumer (49-53 percent) and issuing bank pass-through (80 percent towards cardholders). Similarly, a final assessment lacks empirical evidence on the acquiring market. 105 A. Veljan. 2020. Influence of intra-and inter-system concentration on the pre-regulated setting of interchange fees within cooperative card payment networks, Journal of Banking Regulation, 21, pp. 139–151. 106 A pass-through rate from issuing banks towards cardholders is determined at 22 percent. The EC estimates a maximum pass-through of 30 percent - 40 percent. European Commission. 2013. Commission Staff Working Document Impact Assessment <https://eur-lex.europa.eu/resource.html?uri=cellar:906ed6d3-f509-11e2-a22e-01aa75ed71a1.0001.04/DOC_1&format=PDF> accessed 26 January 2020. 107 As per above, issuing banks are confronted with 4.6–4.7 billion Euro in immediate (24 billion Euro in the long-run) revenue losses. Given that pass-through is determined at 22 percent, this would result in a negative long-term impact of 5.3 billion Euro on consumers, stemming from higher annual card fees and/ or reduced rewards and benefits programs. This results in a decrease of potential consumer benefits to 7.5 billion Euro. 108 European Commission. 2020. Study on the application of the Interchange Fee Regulation <https://ec.europa.eu/competition/publications/reports/kd0120161enn.pdf> accessed 24 April 2020 109 The Payment Systems Regulator. 2018. Market review into the supply of card-acquiring services: Draft Terms of Reference <https://www.psr.org.uk/psr-publications/consultations/mr18_1.1_draft_tor_card_aquiring_services> (accessed 1 January 2020) initiated a market review into the supply of card-acquiring services in the United Kingdom, covering among others topics such as transparency of reporting and pass-through towards merchants. Author notes We wish to thank Pascual Fernández Martinez and Víctor Martín Barroso (Universidad Rey Juan Carlos) for their contributions. Department of Applied Economics, Faculty of Social and Legal Sciences, Universidad Rey Juan Carlos, Calle Tulipán, s/n, 28933 Móstoles, Madrid, Spain International Corporate Relationship Management, Elavon Merchant Services (U.S. Bancorp), 70 Gracechurch Street, 2nd floor, London EC3V 0HR, United Kingdom Department of Business, Faculty of Business and Social Sciences, University of Applied Sciences, Berliner Tor 5, 20099 Hamburg, Germany. Department of Business, Faculty of Business and Social Sciences, University of Applied Sciences, Berliner Tor 5, 20099 Hamburg, Germany. The views expressed in this article are strictly those of the authors. Declarations of interest: none. This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors. © The Author(s) 2020. Published by Oxford University Press. All rights reserved. For permissions, please e-mail: journals.permission@oup.com This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/open_access/funder_policies/chorus/standard_publication_model)
TI - An Event Study Analysis of the Impacts of the European Interchange Fee Regulation
JF - Journal of Competition Law & Economics
DO - 10.1093/joclec/nhaa019
DA - 2021-03-10
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SP - 63
EP - 94
VL - 17
IS - 1
DP - DeepDyve
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