Margrethe Vestager, European Commissioner for Competition
The European Commission found that New York-based financial services giant MasterCard intentionally levied the fees on card payments, thus affecting tens of thousands of customers and businesses across the E.U.
The commission had already identified similar practices at MasterCard’s rival Visa. According to the E.U., both companies infringed the European single market competition regulations.
“We currently suspect MasterCard is artificially raising the costs of card payments, which would harm consumers and retailers in the EU,”
Margrethe Vestager wrote in the commission’s report.
Vestager, who was appointed EU Competition Commissioner in August, 2014, also said that the commission had doubts over the business practices MasterCard employed in cross-border transactions on the European continent and the fees it requested from businesses for payments made with cards issued outside the euro zone.
The E.U. also urged the company to reply to their charges. MasterCard responded that it had read the commission’s statement of objections and its attorneys were currently drafting a proper response.
The credit card issuer also unveiled its plans of collaborating with the European Commission on the overcharging issue within a “constructive dialogue.” Additionally, the U.S. firm said that it was committed to promoting its customers’ best interests and further encouraging electronic payments use across the E.U. and overseas.
The commission had started an investigation into MasterCard and Visa business practices several years ago after receiving complaints from customers and business alike that they were overcharged on card payments.
The two companies particularly hiked the interchange fees, which are requested when using a card and are very different from one country to another. According to the commission’s report, MasterCard banned banks from offering lower interchange fees to the clients from countries where those fees were set on higher levels.
Therefore, the credit card giant’s rules hindered free competition between banks from different E.U. states and barred retailers from benefiting from lower fees on electronic payments.
A couple of years ago, Visa Europe had to cut the cross-border credit card fees by 40 to 60 percent and agreed to refrain from hindering cross-border competition in the wake of a similar commission report. Visa also removed the rule that barred retailers from benefiting lower rates outside their home market.
On the other hand, the commission’s statement of objections doesn’t accurately reflect the results of the final investigation. If companies decline to comply with Brussels’ requirements, they risk fees of up to 10 percent of their annual sales.
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