MasterCard May Face More EU Pressure About Card Fees

MasterCard may soon be in some hot water with European Union regulators, Bloomberg reported, citing sources said to be familiar with an antitrust complaint the payments company may soon receive.

The sources indicate that the EU regulators could send a “statement of objections” to the issuer by July as part of antitrust probe related to swipe fees on credit and debit cards, which often accuse the issuer of creating terms which are anti-competitive. This current EU case dates back to 2013, when the EU was going after companies applying steep fees to foreign visitors.

According to Bloomberg’s report, during that time MasterCard was told its “honor all cards” rule would be part of the regulator’s investigation. The rule requires that merchants accept all card types from MasterCard, even those that may have additional products added on, which Bloomberg indicated could be travel insurance, etc.

The report also said that MasterCard “is working with the European Commission on the issue as part of an ongoing constructive dialog,” but didn’t offer more on specific details. The EU Commission denied comment to Bloomberg.

Because of MasterCard’s international presence, one payments executive suggested that MasterCard will fight any potential antitrust allegations.

“MasterCard being much more internationally focused, it has been more inclined to fight than to settle so far,” Ruth Milligan, senior adviser on payment services at EuroCommerce, told Bloomberg, which noted that the group represents European retailers that back the EU Commission in this case.

European retailers have fought against interchange fees, and the EU’s latest regulation would go in favor of the retailers. The European Parliament voted overwhelmingly in March to cap payment card interchange fees for consumer payments. A deal was struck in December between lawmakers and the EU Council to set the caps at 0.2 percent for debit and 0.3 percent for credit transactions and also set limits on Visa and MasterCard’s “Honor All Cards” rule. For consumer debit cards, the new rules also allow individual EU member states to set lower percentage caps and impose maximum fee amounts.

The European Commission said it estimated that the new rules could reduce hidden fees for consumer payment cards by about €6 billion ($6.8 billion) each year. The EU has also suggested that MasterCard has tried to stop those rules from being put in place, according to the report.

Visa Europe has also had its share of issues with the EU over fees, Bloomberg reported, and last year said it would reduce fees for credit card payment processing as part of a EU settlement — resulting in a 40-60 percent decrease in fee charges.