EU fines Mastercard £500m for causing customers to pay more in card payments

The European Commission has fined Mastercard more than half a billion pounds for stopping retailers from looking for better card payment terms at banks around Europe.

The Commission, which polices competition, said that Mastercard’s rules prior to 2015 forced retailers to pay certain bank fees in the country they are located rather than let them shop around.

This restricted competition between banks and raised the cost of card payments for both retailers and customers.

EU Competition Commissioner Margrethe Vestager said that ‘Mastercard’s rules artificially raised the costs of card payments, harming consumers and retailers in the EU.

‘By preventing merchants from shopping around for better conditions offered by banks in other member states, Mastercard’s rules artificially raised the costs of card payments, harming consumers and retailers in the EU.’

The fine is €570million which works out at roughly £501million. 

Mastercard, which also controls the Maestro brand, is the second-largest card program in Europe.

The Commission says the size of the fine was based on factors like the value of sales relating to the infringement and its gravity.  

Brussels has spent more than a decade cracking down on fees charged by credit card companies. 

In December 2015, EU regulations capped the fee charged by Mastercard and Visa within the European Economic Area to a maximum of 0.2 per cent of the transaction value for debit cards, and 0.3 per cent for credit cards. 

But before this date, the fees – known as the intercharge fee – varied from country to country across Europe. 

Its social media post on Twitter today shows how it worked:

Mastercard was granted a 10 per cent reduction in the fine for cooperating with investigators.

The company said: ‘Today’s decision by the European Commission puts an end to a legacy investigation concerning Mastercard’s European central acquiring rules that had been in place until 2015.

‘This decision relates to historic practices only, covers a limited period of time of less than 2 years and will not require any modification of Mastercard’s current business practices.

‘Mastercard sees the closure of this anti-trust chapter as an important milestone for the company.’

The EC says that fines imposed on companies for breaching EU antitrust rules are paid into the general EU budget. 

Member States’ contributions to the EU budget for the following year are reduced accordingly, so the fines help reduce the burden for EU taxpayers.