Mastercard cuts euro zone interchange fees for Maestro

Now here's an interesting thing - whilst MasterCard is busy defining its corner on the interchange fees its members charge each other on debit card payments, it's just announced a reduction and major revamp in the way the charges are imposed from January 1, 2008.

Under the current rules, member banks pay each other between 0.50 and 1.15 per cent of the transaction value. Under the new arrangements, the plan is to charge five euro cents, plus a much-reduced fee of between 0.20 and 0.30 per cent.

According to MasterCard, citing the example of a 50 euro transaction, the interchange fee will be between 0.09 and 0.20 euros, versus current Maestro rates of 0.25 to 0.59 euros.

The reductions are a lot more than the European Union has been asking for, and pave the way for - you guessed - the use of a Maestro debit card as an electronic replacement for low-value cash transactions.

The only bugbear, from what I can see, is that these rates only apply to transactions involving euros, so the UK card issuers - and their customers, as usual - will end up having to pay more.

I wonder this is why the UK's card issuers are dragging their feet when it comes to trialling, let alone introducing, the MasterCard PayPass RFID card system?...