Card Interchange Fees: MasterCard Loses its Challenge against the European Commission
- The Court of Justice of the European Union rejected the appeal by MasterCard against the decision by the Commission. The default cross-border interchange fee system for European cards will therefore remain at the levels decided by the Commission's Directorate-General for Competition at the end of 2007.
- The compromise negotiated at that time involved a rate of 0.2% of the transaction amount for a debit card and 0.3% for a credit card. This corresponds to a reduction in half the amount for the issuer.
- The Court did not find any justification for MasterCard's interchange fees, judging that they overestimate the costs borne by the issuers and inadequately assess the advantages which merchants derive from the cards.
- The backup of the MBNA, HBoS, HSBC, Lloyds TSB and Santander was not enough to convince the judges that higher fees were justified. The EU Commission's position was backed by the British Retail Consortium and the EuroCommerce trade representation to the EU.
Source: L'Agefi
- This confirms the downward trend in interbank fees applied to all methods of payment across Europe. Within a year in France, banks have been forced to commit to lower interchange fees for card payments, and a two part reduction in fees on direct debit. Such lowering of rates was already implemented in Spain in 2005 and is still in place.
- Joaquín Almunia, Vice-President of the European Commission and Commissioner in charge of Competition, called on MasterCard and its rival Visa to "consider carefully how to bring the multilateral interchange fees in the EU in line with competition". Last January he announced that he was planning a number of decisions with regard to the ongoing case against Visa. Indeed in 2010, this institution also decided to commit unilaterally and lower commission fees on debit cards to 0.2%.
- These levels therefore seem to be gaining a following, pending the possible adoption of legislation, and as a result of the recent green paper presented in Brussels on 4 May 2012. It is worth remembering that the default interchange rate is applied only in the absence of direct agreements on cross-border transactions between an issuer and an acquirer. MasterCard previously estimated that this represented 5% of transactions flows in Europe.