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On January 22, 2019, the European Commission (“EC”) fined MasterCard €570.5 million for not allowing merchants to benefit from the interchange fees offered by banks located in other Member States between 2013 and 2015. The decision concludes the investigation that the EC opened in 2013 against MasterCard.

Card payment systems play a crucial role in achieving a single market, by allowing European citizens to make domestic and international transactions physically and online, regardless of the retailer’s location. Every time a consumer uses a payment card, the retailer’s bank pays an interchange fee to the card issuer bank. The retail bank passes on the interchange fee to the retailer, which, in turn, may pass on that cost in the end price charged to consumers for the goods or services acquired.

MasterCard is the second largest card payment operator by number of customers and transaction value in the European Economic Area (“EEA”). In the MasterCard network, card issuers offer card-payment related services under the Mastercard and Maestro brands. The retail merchant acts as a platform through which the issuer banks facilitate the card transaction for cardholders and the transfer of funds to the retailer’s bank.

Before the Interchange Fee Regulation came into force on December 9, 2015, interchange fees fluctuated considerably from one EEA country to another. According to the EC, between 2013 and 2015, MasterCard forced retailers’ banks to apply the interchange fees of their country of residence. That meant that merchants located in countries with higher interchange fees could not benefit from the lower fees offered by banks located in another Member States.

The EC concluded that, by preventing merchants from finding better banking conditions in other Member States, MasterCard artificially elevated the cost of card payments, which was seriously damaging to merchants and to the end consumer. Thus, the EC fined MasterCard €570 million, although with a 10% reduction for cooperating, and recognizing the facts and its breach of EU competition rules.

This is not the first time that the EC has investigated MasterCard on interchange fees. In December 2007, the EC concluded that the interchange fees charged by MasterCard for crossborder transactions in the EEA (when, for example, a Belgian citizen used his or her Belgian card in an establishment in France) restricted competition between banks. The Court of Justice of the European Union upheld this decision in September 2014.

Moreover, there is an ongoing dispute between the EC, Visa and MasterCard on interregional interchange fees for payment card transactions charged by these two companies. In December 2018, the two companies offered commitments that included at least a 40% decrease in fees during five and a half years. The EC has invited all stakeholders to send their comments on the commitments proposed separately by Visa and MasterCard.



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