A Thing
The Green SheetGreen Sheet

The Green Sheet Online Edition

January 14, 2008 • Issue 08:01:01

EC interchange ruling: Merchants applaud, MC digs in

It's a coup, of sorts, for merchants and their allies in the battle against the big-name card brands' pricing strategies. In a ruling handed down last month, the European Commission said certain interchange rates for MasterCard- and Maestro-branded credit and debit card payments violate EC rules, which are roughly equivalent to fair competition laws in the United States.

The rates in question apply only to consumer cards, not corporate or business cards.

They affect virtually all cross-border transactions and certain domestic transactions using MasterCard and Maestro cards, according to a Dec. 18, 2007, EC announcement.

EC Competition Commissioner Neelie Kroes described the charges, known as multilateral interchange fees (MIFs), as "among the highest in Europe, set at more than 0.50% for debit ... and more than 1% for credit card payments."

The EC has given MasterCard Worldwide six months to drop the fees, or face daily penalty assessments equal to 3.5% of its daily transaction totals.

In its statement, the EC described MasterCard's MIF as "a subsidy to its member banks [that] burdens the acquiring party with costs."

Merchant groups immediately seized on the EC ruling to push for similar legal action in the United States.

"European authorities say MasterCard is double dipping in Europe, and that's exactly what we think both MasterCard and Visa are doing in the U.S.," said Mallory Duncan, Senior Vice President and General Counsel at the National Retail Federation.

"It's time for this to stop and ... authorities here in the U.S. should take the European ruling as a signal that it's time to bring the same relief to U.S. consumers."

MasterCard appears to be digging in for a long fight.

"We are disappointed that after years of review of MasterCard Europe's transparent, default cross-border interchange fees, the commission failed to appreciate that without a mechanism to fairly share costs among all the participants in a payment system that functions across Europe and around the globe, consumers will be hurt," said Javier Perez, President of MasterCard Europe. end of article

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

Prev Next
A Thing