EU Ups the Ante in Fight Over MasterCard Fees

(CN) - In an ongoing fight with MasterCard over credit card fees, EU regulators on Thursday accused the credit giant of overcharging travelers to process their purchases in Europe.

The European Commission's decision to issue a formal accusation against MasterCard - known as a statement of objections - comes two years after the regulatory body opened an antitrust investigation into whether the company stifles competition by charging interbank fees to foreign tourists shopping in the EU.

Regulators now believe that MasterCard's rules prevent banks from offering lower interchange fees to retailers based in member states where the fees may be higher - stifling competition between cross-border banks.

In the case of foreign tourists who use their MasterCards in Europe, the commission accuses the company of setting an "artificially high minimum price for processing these transactions," according to a commission statement.

The commission noted that in both situations, the retailers' banks pass the processing fees they paid the cardholders' banks on to the retailers, who build the fees into the prices paid by consumers - whether they pay by card or in cash.

"We currently suspect MasterCard is artificially raising the costs of card payments, which would harm consumers and retailers in the EU," said competition commissioner Margrethe Vestager. "We have concerns both in relation to the rules MasterCard applies to cross-border transactions within the EU, as well as the fees charged to retailers for receiving payments made with cards issued outside Europe. MasterCard now has an opportunity to respond to our charges."

This is not the first time MasterCard's interbank - also known as interchange - fees have raised the commission's hackles.

After taking the credit giant to court, regulators won a victory in 2012 when the European General Court rejected MasterCard's claims that without the fees it would be forced to cut cardholder benefits or find other ways to make up the lost revenue.

The EU high court affirmed that ruling in 2014.

Earlier this year, the European Parliament voted to cap interchange fees at .2 percent of transaction value for debit purchases and .3 percent for credit cards EU-wide - and gave member states latitude to adopt even lower caps for debit cards.

The caps do not apply to transactions made by foreign tourists, the commission noted.

MasterCard said it will formally respond to the charges and is "working with the European Commission on the issue as part of an ongoing constructive dialogue."

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