The EU’s executive said the fees applied by the company in a number of EU countries and on virtually all cross-border payment card transactions violated the bloc’s competition rules. MasterCard was given six months to withdraw the fees – which range from 0.4% to 1.20% of the value of the transaction – or face daily fines worth 3.5% of the company’s daily global turnover. EU Competition Commissioner Neelie Kroes said she expected the price of many consumer products to drop as a direct result of Wednesday’s decision. „I think this is a nice Christmas gift (for consumers),” Kroes said. In a statement issued by its Belgian office, MasterCard Europe said it planned to appeal the decision to the European Court of First Instance.
The company’s president, Javier Perez, expressed disappointment over the fact that the Commission had „failed to appreciate that without a mechanism to fairly share costs among all the participants in a payment system that functions across Europe and around the globe, consumers will be hurt.” MasterCard uses a complex mechanism to determine a minimum price merchants must pay for accepting the organization’s payment cards. Its fees are generally passed on to consumers by retailers in the form of higher prices. „Consumers foot the bill, as they risk paying twice for payment cards: once through annual fees to their bank, and a second time through inflated retail prices, given that retailers set their prices taking account of all costs, including MasterCard’s interchange fees,” Kroes said. MasterCard’s fee „therefore acts like a „tax on consumption” paid not only by card users but also by customers using cash and cheques, ” she added. MasterCard charges fees on most cross-border transactions as well as on domestic card payments in Belgium, Ireland, Italy, the Czech Republic, Latvia, Luxembourg, Malta and Greece. In its investigations, the Commission concluded that such fees were not justified.
MasterCard rival VISA, whose fee exemption from the EU runs out at the end of the year, was also warned that it might soon find itself on the receiving end of the Commission’s wrath. In a statement, VISA Europe said it saw „no evidence” that its own charges system „caused consumers to pay twice.” Over 23 billion payments, exceeding a value of €1.35 trillion ($1.95 trillion), are made every year with payment cards in the EU. (m&c.com)
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