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Wirecard Falls on EU Proposal to Cap Fees on Credit Cards

Wirecard AG, a German maker of electronic-payment software, fell the most in 5 1/2 months as the European Commission considered plans to cap fees on all consumer debit- and credit-card transactions.

Wirecard declined as much as 7.9 percent to 20.15 euros, the steepest intraday drop since Jan. 31, and was trading down 2.3 percent at 4:24 p.m. in Frankfurt, valuing the company at 2.4 billion euros ($3.15 billion). Trading volume was about four times the three-month daily average.

The European Union regulator would limit interchange fees paid by retailers to 0.2 percent a transaction on debit-card payments and 0.3 percent on credit cards, according to draft plans obtained by Bloomberg News. Industrywide revenue would drop 48 percent to 2.5 billion euros for debit-card fees and 39 percent to 3.5 billion euros for credit-card charges, the Financial Times reported earlier today.

Shares of Aschheim, Germany-based Wirecard are “trading at a high multiple, since a lot of growth expectations are priced into it,” Knut Woller, a Unterschleissheim, Germany-based analyst at Baader Bank AG, said by phone. “Therefore, any question mark behind the growth potential has a negative impact.”

Even so, the drop isn’t justified as “the net effect of the cap on the transfer interchange fee on earnings is nil,” as Wirecard collects transaction fees and mostly redirects them to the card issuers, such as Visa Inc., Woller said.

Electronic payments and risk management accounted for 66 percent of Wirecard’s revenue in 2012, according to data compiled by Bloomberg.

“Mid-term, Wirecard may actually benefit from the ceiling, since it would make it cheaper for retailers to accept the cards and therefore could result in a broader penetration of credit card usage also in the online space,” Woller said.

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