In one of the latest developments over interchange card fees, Mastercard Inc (NYSE:MA) lost against the European Commission, as the European Court of Justice backed European Commission over their proposed ban on cross-border fee charged by Mastercard.
In 2007, the European Commission stated that the interchange fees charged by Mastercard Inc (NYSE:MA) for cross-border transactions violates healthy competition rules. Precisely, interchange fees is the money charged by cardholder’s bank from the retailer’s bank against every single transaction. According to the commission, this rule leads to an elevated price for the consumer and it is uncompetitive.
However, Mastercard Inc (NYSE:MA) argued that removing the interchange fee would be expensive on consumer’s pocket, as the banks will charge a higher fee from the retailer to avoid losses. After the favorable decision, Antoine Colombani, spokesman for Joaquin Almunia (EU Competition Commissioner), said, “Today’s judgment is a big win for European consumers, who for too long have been paying unjustifiably high hidden fees.”
Earlier, Mastercard Inc (NYSE:MA) won a case against the European Union antitrust regulators regarding the availability of a study comparing the cost of bank cards with cash, as the Union denied access to the study. The EU General Court ruled out that the Commission was wrong in denying the report. Mastercard Inc (NYSE:MA) appreciated the ruling and the president of Mastercard Europe, Javier Perez, said, “As the European Commission claimed to base its legislative proposals to regulate interchange fees on the methodology used in this study, it was crucial that its findings be made public.”
However, the ruling didn’t offer much help to Mastercard in defending its right to charge interchange fees for cross-border transactions. EU regulators have followed credit card and debit card fees for over a decade.
This article has been written by Prakash Pandey and edited by Serkan Unal.