Credit card companies give in to EU demands to cut fees
Move by Visa and Mastercard will mean 40% lower charges on cards issued outside EEA
Visa and Mastercard can be fined up to 10 per cent of their global turnover if they fail to meet their commitments. Photograph: Carlos Garcia Rawlins/Reuters
Mastercard and Visa have promised to reduce the fees charged on purchases made in the EU with foreign-issued debit and credit cards. It is the latest concession in the payment companies’ long-running antitrust battle with Brussels.
Retailers will be charged an average of 40 per cent less on purchases made in the European Economic Area (EEA) using Mastercard, Maestro, Visa, Visa Electron and V Pay credit and debit cards issued in countries outside the EEA.
The fees will be reduced for 5½ years and Visa and Mastercard can be fined up to 10 per cent of their global turnover if they fail to meet their commitments.
European competition commissioner Margrethe Vestager said the binding commitments “will reduce the costs borne by retailers” and, when taken with earlier decisions, will “lower prices for European retailers to do business, ultimately to the benefit of all consumers”.
Brussels has been investigating various transaction fees charged by the payment companies for over a decade.
The EU enforcer fined Mastercard €570 million in January for limiting the ability of retailers and banks to shop around between member states to offer lower fees, thereby restricting competition between banks and raising payment costs for retailers and customers.
In 2009, Mastercard agreed to limit the fees charged on cross-border EU purchases made with European-issued cards – to a maximum of 0.2 per cent of transaction value for debit cards and 0.3 per cent for credit cards.
Visa soon followed suit and, in 2015, the EU’s Interchange Fee Regulation made those caps law.
The two companies did not immediately respond to requests for comment.
– Copyright The Financial Times Limited 2019