miércoles, 23 de abril de 2014

Spain gears up for European election battle

Spain's ruling party, the Partido Popular (PP), has finally published its candidates list for the European elections. EurActiv Spain reports.

Almost half of the candidates from PP (23 of Spain's 54) are currently MEPs. The Spanish Socialists, for its part, have chosen a formula which alternates between men and women, preferring “renewal and rejuvenation”. Thus, 60% of the Socialists candidates are new, and their age is lower compared to the median of 2009 (48 versus 56).

The Partido Popular has decided to refresh only three of the first ten candidates on its list. Number one is for the Minister of Agriculture, Miguel Arias Cañete, who is likely to be the Commissioner. Asked about this issue, Cañete says that his objective is “to win the candidacy”, although afterwards, he can “aspire to anything”.

Esteban González Pons is the second candidate of the PP and, predictably, the Head of the Spanish Popular delegation, if Arias Cañete goes to the European Commission. Jaime Mayor Oreja, the current Head of the list (for two terms in a row), decided to leave his European career for the moment, although his future position in Spain is still a mystery.

The following positions in the PP’s list are filled by current MEPs, including  Teresa Jiménez Becerril, Luis de Grandes Pascual and Pilar del Castillo Vera. The sixth position is for the former President of Murcia, and President of the Committee of the Regions, Ramón Luis Valcárcel. He is followed by well-known MEPs such as Rosa Estarás, Francisco Millán and Pablo Zalba.

According to the most recent survey by Metroscopia, the Partido Popular will win 16 seats in the European Parliament, 2 less than the Socialists.
The decision will be taken by 36.5 million Spanish Citizens who can vote next 25 May. The biggest fear is abstention, which reached 54% in 2009 and 2004.

Socialists and other political parties

The survey doesn’t give a chance to MEP Alejo Vidal-Quadras, Vice President of the European Parliament, to gain a seat. He has decided to leave the PP, in order to lead a new political group VOX, which aims to offer an alternative to Spain's two main parties, the Partido Popular, and the Socialists. VOX was founded by former MEP Santiago Abascal, and José Antonio Ortega Lara.

The Socialists (PSOE), for its part, are led by Elena Valenciano, the Vice Secretary General of the group. 60% of the names on its list are new. However, it also includes veterans like Ramón Jáuregui and Fernando López Aguilar.

Raül Romeva, will campaign with the French Greens.

After the Socialists and the PP, surveys say that the Left party will gain 9 seats, followed by UPyD (5), CEU (the Catalan CiU, the Basque PNV, the Canarian CC, the Valencian BNV, the Majorcan UM, UMe y PA) with 3, the Catalan ERC with 2 and Ciutadans with 1.

martes, 22 de abril de 2014

What Is Draghi Waiting For?


Inflation in the euro area has fallen below one percent in recent months. Even Spain entered deflation in the last month. This fall in inflation, coupled with slow growth, has made many remember that this crisis can end as "Japanese style," referring to the many years in which Japan has experienced a low growth rate and a very low inflation.

In this situation, it seems clear that the European Central Bank should act. Since interest rates are already at record low, all expect the ECB to announce unconventional measures like the American style QE, which could increase inflation and give a small boost to the economy. However, recent history has shown us why Mario Draghi has not acted and why he will probably act, and act forcefully in the coming months.

First, he has always been cautious in his decisions. This issue has drawn criticism from many, because it seems as if he always wants to reach the limit, as he did with that famous phrase "we will do whatever it takes to save the euro" in 2012 he could have spoken before, saving a few months of maximum voltage, or not. I have no doubt that he acted when he was sure that all the other players involved were fully committed to save the Euro.

Secondly, he does not want Member States to relax. This has always been his obsession, and it seems as it is going to continue. In virtually all meetings he always reminds Member States that the ECB has to watch inflation, and that they cannot expect him to do what States don't do. Aggressive monetary policy which creates economic growth could relax the States, and they would stop structural reforms, given the high political cost of these reforms.

In addition, a key issue that Draghi always seems to be careful with is unanimity in decisions. And here it looks as if things have changed. If in recent months it seems that German opposition to unconventional measures was clear, now taking a look at the situation, some may argue their opposition has ceased, however, not enough. Currently there is unanimity to carry out some unconventional measures such as stop sterilizing debt operations, but this is not the case for other more ambitious measures which will likely have a greater impact in restoring credit to SMEs and families. I'm sure Draghi wants to be ambitious, as he was in the summer of 2012. Let's hope this is the case.

miércoles, 16 de abril de 2014

The EU overregulation of Interchange Fees hurts the average card holder and consumers in Europe

Once again the EU Parliament has lost an opportunity to vote in defense of the European consumers. Last week the MEPs voted in favor of credit card payment fee caps, best known as interchange fees.This proposal had been previously endorsed, last February, by MEPs Pablo Zalba Bidegain (Vice-Chair of Committee on Economic and Monetary Affairs) and Diogo Feio both from the European People Party (EPP).
According to a press release by EU Parliament “The service or “interchange” fees that banks charge for processing transactions under schemes such as Visa and MasterCard, would be capped at 0.3% of the transaction value for credit card transactions and 7 euro cents, or 0.2% of the transaction value (whichever is lower), for debit card ones.” Now the proposal will be tabled to the Council of the European Union in order decide whether or not to adopt said legislation.
For those who are unaware of what interchange fees are, interchange fees are primarily transaction costs charged to card accepting merchants by companies (acquirers) that process card transactions. The recent trend by regulators has been to clamp down on interchange fees because they have been perceived to inflate costs for consumers. Therefore, in countries like Spain and Australia for instance, regulations were put in place to cap interchange fees in an effort to reduce costs for consumers. However, such regulatory reforms have instead overwhelmingly hurt consumers, especially card holders. Instead of seeing the prices at stores decrease (due to lower interchange fees), stores are predictably capitalizing on their increased profit margins. In fact, merchants in Australia are lobbying to further reduce interchange fees in order to further boost their profits.
As a result of regulations reducing interchange fees, card issuing banks have seen their profits diminish substantially and such profit losses are understandably coming at the expense of the card holders. Today, the consumers of Spain and Australia are seeing higher card holder fees, with decreased benefits (rewards). Neither of these outcomes benefits consumers. Additionally, banks and credit card companies often compete in order to attract individuals by offering benefits (or rewards for using the card). By inhibiting techniques that cardholder can employ to attract cardholders, regulators are interfering in the markets, distorting costs and hurting the very people that such overzealous regulations are meant to protect, the everyday consumer.
While in theory it would make sense that merchants pass on savings to consumers, as Evans, Chang and Joyce show in their study, this is rarely occurs in reality because it requires “perfect competition with constant unit costs.” Furthermore, Chang, Evans, and Joyce point out that because banks can decide how to distribute their costs, in a variety of fashions when they lose money due to lower interchange fees, banks can respond in a number of ways including reduced services, lower interest rates, etc.  Looking at data provided by CRA International, Banking fees in Australia reflect the adverse effects of the Reserve Bank of Australia’s interchange fee regulations of 2003. For example, after interchange fee regulations, annual fees increased for standard rewards cards by 77 percent between 2001 and 2004, and by an 39 percent between 2002 and 2004. Additionally, over-limit-fees increased by 367 percent in between 2001 and 2004, and 115 percent between 2002 and 2004.
A 2013 study conducted by Europe Economics in collaboration with Professor Sheri Markose found that if the European Commission’s proposals on restricting interchange fees, it would have multiple adverse effects on the UK economy. For instance, if the UK were subjected to the Commission’s current proposals, card issuers would lose revenues up to £1 billion, cardholders fees would rise up to £.33 for debit cards and £17 for credit cards despite there being no reduction in prices for consumers at the store.
Simply put, the way to protect consumers is to let the free market correct itself. Merchants are free to decide whether or not to accept credit and debit cards. While some businesses choose to not accept credit cards (as is their right), merchants more often than not choose to accept credit and debit cards because it is more advantageous for their business. Accepting cards as a form of payment allows the merchants to increase the likelihood that consumers will purchase in their store (or purchase more). Therefore, merchants, despite the interchange fees, come out benefiting.
With little more then a month until the EU elections, scheduled between May 22nd and 25th of 2014, it is the hope of the Property Rights Alliance that such a poorly crafted proposal will be not adopted by the Council of European Union and modified by the new, hopefully more pro-free market, elected MEPs that will take office in July 2014.

martes, 15 de abril de 2014

2014 European Elections: the vote is yours!

Jasper de Boer, a member of Europe-Yes team interviewed MEPs in Brussels. He asked them what they think about the elections in May, why this elections are different and why should people vote.

jueves, 10 de abril de 2014

The Travel Retail Fair Payment Alliance (FPA) and its allies have moved closer to securing lower fees from banks and credit card companies after the latest vote on the matter in the European Parliament on 3 April.

A full plenary sitting of the European Parliament voted to adopt proposals seeking to cap interchange fees, regulate commercial cards and allow cross-border acquiring.

As previously reported, in February the European Parliament's Economic and Monetary Committee (ECON) adopted reports by MEPs Pablo Zalba and Diogo Feio on the European Commission's ‘Payments Package', endorsing the industry’s long-running push for fairer transaction terms from credit card companies and banks.

Proposals of particular interest to travel retailers are the capping of consumer (and now commercial) credit card transactions at a maximum 0.3% and a cap on consumer and commercial debit cards at a maximum 0.2% or €0.07 per transaction, whichever is the lower.

Despite last minute moves to water down the proposals in favour of the banks and card schemes, MEPs adopted the ECON reports without meaningful amendment. This marks a significant step forward on behalf of the business, said the Travel Retail Fair Payment Alliance (FPA) – and underlines the soundness of the arguments tabled with European politicians and administrators by the FPA and its allies.

The Parliament's committee and first reading stage was the first critical hurdle for the reports in the drive to ensure they become law. They passed that phase with all the key elements supported by the FPA intact.

Now the proposals will be tabled with the EU Council of Ministers to adopt a common position. The Italian Presidency is expected to oversee that debate when it assumes the Council Presidency in July.

The FPA is calling on ministers to accept the findings of the Commission, along with the conclusions of the European Parliament to swiftly adopt these reports so the legislation can enter into EU law as soon as possible.

Jacques Parson, Chairman of Kappé International and FPA leader said: “This is wonderful news and I should like to thank those in the FPA network for their support. The Parliament has taken a bold step on behalf of us and our customers and I offer MEPs my congratulations and appreciation. Making these proposals law would drastically improve competition and conditions for all stakeholders in credit or debit transactions, both in-store and online. That is good for us and our customers.

“Now I call on all the industry's support. We must all work hard to ensure our governmental representatives at the Council of Ministers appreciate and understand why such European-wide legislation is necessary and needed urgently to promote a fairer, more competitive payments structure.”

Parson is also Chair of the Dutch Retail Federation's Payments Committee, as well as a EuroCommerce representative to the recently created European Retail Payments Board.

lunes, 7 de abril de 2014

Bank card charges: “Consumers will save hundreds of millions or even billions of euros”

The fees that banks charge for processing consumers’ payments in the EU could be capped at 0.3% of the transaction value for credit card transactions and at a maximum of seven euro cents for debit cards, under a proposal being voted on by MEPs on Thursday 3 April. Pablo Zalba, a Spanish member of the EPP group, who is responsible for steering the plans through Parliament, told us more about the benefits.

How will consumers benefit from these proposals?

Consumers will benefit in two main ways: we will impose a cap on these interchange fees, so they will save hundreds of millions or even billions of euros; and we will introduce more transparency, so they know when paying how much corresponds to these fees. An additional advantage of this proposal is that it will help to combat fraud, because when card use increases, fraud becomes more difficult.

Are financial institutions charging artificially high interchange fees to consumers as telecom operators charge for roaming abroad?

It's not up to me to say if these fees are artificially high or not. The truth is that there has not been much competition in this market so far, and we know what happens in these cases. What I can say is that once this legislation comes into force, people will pay less. And as card payments increase in the medium and long term, financial institutions will receive more income.

Which EU countries have the cheapest and the most expensive interchange fees?

Eastern consumers are the ones paying higher fees due to lower card penetration. Nordic and Dutch consumers are paying lower fees.

Orther news: