The EU’s statement of objections targets measures thwarting cross-border competition among banks that offer card services to retailers as well as excessive fees when foreign visitors go shopping in the 28-nation bloc, the European Commission said in an e-mailed statement on Thursday. The charges against Mastercard come three years after the announcement of a still ongoing investigation into credit card giant Visa.
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If found to have breached the region’s rules, MasterCard could face fines of up to 10 percent of its worldwide revenue, which was about $10 billion past year.
The fees charged when a Chinese tourist, for instance, uses their card to pay a restaurant bill in Brussels are up to five times higher than those paid when a consumer uses a card issued in Europe, the commission said. The fees vary widely across the European Union, with average levels ranging from less than 0.2% in the Netherlands to more than 1.5% in Poland.
The chief of antitrust with the EU Margrethe Vestager said the group suspects that MasterCard has artificially raised the cost of making card payments, which would hurt both consumers and retailers across the EU.
European Union officials have claimed that the “interchange” fees, which are the fees that retailers pay banks to process card payments, harm consumers and retailers in the EU, and are “unjustified”.
MasterCard didn’t immediately respond to a request for comment. MasterCard now has an opportunity to respond to our charge, the commissioner further stated. The interchange fees on these transactions show wide variations between countries.
In September the EU’s top appeals court upheld a 2007 decision by the commission ordering MasterCard to withdraw fees for cross-border transactions in Europe. This violates European antitrust laws because the credit card companies’ rules prevent retailers benefiting from lower fees in other parts of the EU and restricts competition between banks cross-border.
Reasons for the two probes are essentially the same: an increase in card payments. However, the caps of the Regulation do not apply to inter-regional transactions, one of the two issues of the current investigation.
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Separately, TheStreet Ratings team rates MASTERCARD INC as a Buy with a ratings score of A+.
