Mastercard was slapped with a $648.3 million fine by the European Union, which alleged that the payments company raised the costs of card payments artificially.
According to a report in Reuters, citing the European Commission, the bloc's antitrust regulator, the move is part of an effort on the part of European regulators to stamp out fees that U.S. credit card companies charge. According to the report, the European Commission said that Mastercard has long stopped retailers from looking for lower bank fees that are available outside of their country. That, in turn, has led to increased prices levied on retailers and consumers. The European Commission also contend it limits the competition across borders.
Reuters noted that in December, Mastercard warned that it could be hit with a $650 million fine. Closing that inquiry represents an "important milestone for the company," the outlet quoted Mastercard as saying on Tuesday (Jan. 22).
As it stands, the interchange fees charged to retailers when customers use a credit or debit card can differ from one country to the next in the European Union, presenting an opportunity, in theory, for retailers to shop around for a lower fee. Reuters noted that Mastercard received a 10 percent reduction in the fine for cooperating with the inquiry and accepting that it had run afoul of European Union competition rules.
Mastercard and Visa, in negotiations with the European Commission, had offered to put a cap on the fees applied to card payments by tourists in the EU to end the antitrust investigation. The two payment companies have proposed a 0.2 percent fee on non-EU debit card payments done in shops, and a 0.3 percent fee on credit card payments. This would bring them down to the level of EU cards.
The European Commission has been fighting the credit card companies over the interchange fees, contending that the fees increase prices for customers as they are passed on by the merchant.