Mastercard, Visa agree to cut card fees
The new rates will come into force in October and apply for five years.Europost
After a long-running battle with the European Commission, last week Mastercard and Visa finally agreed to cut their fees for tourists using their cards in the EU, news wires reported. Both firms will now charge retailers around 40% less on non-EU credit and debit cards payments. The EU has accepted the offer as fair. The Commission has insisted that the so-called interchange fees in which the merchant's bank pays a charge to the cardholder's bank, result in higher prices for consumers.
According to the terms of the deal, Visa, the world's largest payments network operator, and rival Mastercard, will charge a 0.2% fee on non-EU debit card payments carried out in shops and a 0.3% fee on credit card payments, the Commission said. This would bring their fees in line with those charged for EU cards. The Commission said the deal would lead to “lower prices for European retailers to do business,” and to lower prices for tourists to the EU. The newly agreed rates will come into force on 19 October and apply for five years.
“The commitments, which are now binding on Visa and Mastercard, will reduce the costs borne by retailers for accepting payments with cards issued outside the EEA. This, together with our January decision on Mastercard's cross-border card payment services, will lead to lower prices for European retailers to do business, ultimately to the benefit of all consumers,” Competition Commissioner Margrethe Vestager said in a statement. The companies' commitments will cut such fees by 40% on average, the Commission said last Monday.
Ultimately the hope is that the EU agreement will make it cheaper when a person uses their debit or credit card overseas. Visa said it had played “a central role negotiating a resolution that achieves the best outcome for all parties.” “European merchants and cardholders continue to enjoy the significant benefits of international card payments, both in store and online, which make an important contribution to European economies,” it added.
According to Mastercard, the closure of this antitrust case “was an important milestone for the company.” Earlier this year, the Commission fined Mastercard €573m for anti-competitive behaviour. It said Mastercard had prevented retailers using cheaper banking services outside their home country.
The Commission has made the commitments legally binding on Mastercard and Visa respectively. If a company breaches the commitments, the Commission can impose a fine of up to 10% of the company's worldwide turnover, without having to find an infringement of the EU antitrust rules.