EU fines Mastercard £500m for limiting competition between banks offering cheaper payment fees

The EU fines Mastercard £500million for artificially raising card payment fees, hitting shoppers with higher prices

  • Mastercard’s rules ‘artificially raised costs of card payments harming consumers and retailers,’ EU competition commissioner Margrethe Vestager said
  • Fined for limiting competition between banks offering cheaper payment fees
  • The £500m fine would have been higher, but Brussels reduced it by 10% to thank Mastercard for cooperating

Mastercard has been fined 570.6 million euros (£500million) by the European Commission for breaching EU anti-trust regulation. 

The European Commission said the card giant was guilty of obstructing merchants’ access to cross-border card payment services.

This limited possibility for merchants to benefit from better conditions offered by banks established elsewhere in the single market, breaching competition law.

The EU has fined global credit card giant Mastercard 570 million euros (£500million) for limiting competition between banks offering cheaper payment fees (file picture)

Commissioner Margrethe Vestager said: ‘European consumers use payment cards every day, when they buy food or clothes or make purchases online.

‘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.’   

After Visa, Mastercard is the second largest credit card issuer in the European market. It has been the subject of an EU anti-trust investigation since April 2013, and has cooperated with the probe.

When a customer pays a retailer with a credit card, the store’s bank pays a fee to the cardholder’s bank.

The retailer’s bank passes on this fee to the store, which increases costs for customers.

Prior to 2015, the level of these ‘interchange fees’ varied widely across Europe, but Mastercard’s rules at the time obliged banks receiving card payments to apply the fee set in their home country.

EU competition commissioner Margrethe Vestager said Mastercard's rules 'artificially raised the costs of card payments harming consumers and retailers'

EU competition commissioner Margrethe Vestager said Mastercard’s rules ‘artificially raised the costs of card payments harming consumers and retailers’

‘This led to higher prices for retailers and consumers, to limited cross-border competition and to an artificial segmentation of the single market,’ the EU Commission said in a statement.

‘On this basis, the Commission concluded that Mastercard’s rules prevented retailers from benefitting from lower fees and restricted competition between banks cross border, in breach of EU antitrust rules.

‘The infringement ended when Mastercard amended its rules in view of the entry into force of the Interchange Fee Regulation.’

The fine would have been higher, but Brussels reduced it by 10 percent to thank Mastercard for cooperating. The company did not dispute the fine.

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

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

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