EU says MasterCard overcharges customers, retailers

MasterCard did not say when it would respond to the charges. The tourist’s fees will be up to five times higher than those paid by a European cardholder for the same bill. The retailer’s bank passes on the fees to the retailer who in turn includes it in the final price a consumer has to pay for his product or services. Those who do not pay by card are also thus affected by the fees. Visa Europe Ltd. has also tussled with the Brussels-based commission over its fees system.

MasterCard’s rules meant banks could not offer lower interchange fees to retailers based in another country where the charge might be higher, it said.

“We now suspect MasterCard is artificially raising the costs of card payments, which would harm consumers and retailers in the European Union”, Margrethe Vestager, Europe’s top antitrust official, said in a statement Thursday.

The second has to do with the company’s method of charging higher fees for worldwide use of cards.

The practice leads to higher prices for retailers in the European Union, and this increase is then passed onto consumers.

On the other hand, the commission’s statement of objections doesn’t accurately reflect the results of the final investigation.

MasterCard didn’t immediately respond to a request for comment.

The Commission opened proceedings in the present case against MasterCard in April 2013. In September 2014, the Commission’s findings in the decision were confirmed by the Court of Justice. Debit card fees should be lower.

A couple of years ago, Visa Europe had to cut the cross-border credit card fees by 40 to 60 percent and agreed to refrain from hindering cross-border competition in the wake of a similar commission report.

Most transactions in the EEA are domestic transactions (i.e. when a consumer uses his card in his own country), and were not covered by the Commission’s proceedings. In fact, the “interchange” fees being charged by MasterCard differs tremendously between member states. They have been challenged by national competition authorities and ultimately lowered in several countries. According to the E.U., both companies infringed the European single market competition regulations. The reasons for the both probes is essentially the same: the increasing the cost of credit card payments.