EU competition law enforcement officials imposed fines on Mastercard for years overcharging credit card transactions. This involves the so-called interchange fees. These concern dealers as well as customers.

The card payment provider has prevented traders to use better terms from banks in other countries of the EU single market, thereby violating antitrust rules, the EU Commission said in Brussels. As a result, the costs for customers have increased.

Background are the so-called interchange fees, which are due in a purchase between the bank such as a supermarket and the customer’s house. When consumers in a shop or on the Internet use a credit card, the merchant bank pays that fee to the cardholder’s bank. The dealer bank can transfer it to the retailer, which allows it to flow into the final price. In the end, the costs can be passed on to all consumers – even those who do not shop by credit card.

“Charges for card payments artificially inflated”

“European consumers use payment cards every day when they buy groceries or clothes or order something online, and Mastercard’s regulations have prevented merchants from obtaining better terms from banks in other Member States,” said EU Competition Commissioner Margrethe Vestager. “The cost of card payments has been artificially inflated – to the detriment of consumers and retailers in the EU.”

EU Competition Commissioner Margrethe Vestager performing in DW's Conflict Zone (Photo: DW)

EU Competition Commissioner Margrethe Vestager performing on DW’s Conflict Zone

According to the European Commission, Mastercard violated antitrust law by 2015. Under Mastercard’s rules, the merchant banks had until then had to apply the charges of the country in which the retailer was established. Interchange fees were harmonized across Europe at the end of 2015. Until then, they differed considerably from country to country. Traders in EU countries with high fees were therefore forced to charge higher costs. The Brussels authorities now concluded that this led to an artificial restriction of the EU internal market and a restriction of cross-border competition. Mastercard has recognized the violations, it was said, therefore, the penalty was reduced by ten percent. Mastercard issues the credit cards of the same name and the Maestro payment card.

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