Payment card networks face a challenge in convincing consumers, merchants and card issuers to use their networks. Overcoming this challenge requires networks to introduce complex rules and prices. However, certain rules and common practices reduce a merchant’s ability to communicate relative cost information of different networks to consumers, prevent steering towards low-cost payment mechanisms and reduce merchants’ bargaining options with card networks. Under these conditions, competition between networks can have the perverse effect of raising total cost to the users (jointly consumers and merchants) because consumers select high-cost systems over low-cost systems. The current initiative to create a Single Euro Payment Area (SEPA) by 2010 provides an excellent opportunity to eliminate unjustified restraints on merchant behaviour, promote alternative suppliers of retail payment services and enhance price transparency, potentially lowering payment costs to the users in many European countries. But there is a substantial risk that instead of improving efficiency, SEPA may promote payment systems with higher costs for users, notably if low-cost national systems are supplanted by high-cost international networks. Policymakers should not only ensure that payment systems comply with SEPA standards, but more importantly ensure the net effects of new regimes are beneficial.