Regulators in the European Union have been keeping a close eye on credit card companies for the last few years, and apparently with good reason.
The EU’s antitrust regulator announced on Thursday that following a two-year investigation, the EU had filed anticompetition charges against MasterCard on Thursday. The charges against Mastercard come three years after the announcement of a still ongoing investigation into credit card giant Visa.
Legal analysts say both probes are about the interchange fees that are set by credit card companies and paid by retailers. The fees are collected by banks that issue credit and debit cards each and every time consumers make a credit card purchase. The size of the interchange fees fluctuate significantly by country.
In its legal filing against the credit card company, the regulator argues that retailers are being charged “an artificially high minimum price” for card payments in the EU, a violation of the region’s strong antitrust laws.
Analysts also point out that the charges could result in fines of up to 10% of annual revenue, which would be close ti $950 million for MasterCard, and as well as require the credit card firms to modify their business practices.
Statements from Mastercard and EU regulator
“We currently suspect MasterCard is artificially raising the costs of card payments, which would harm consumers and retailers in the EU,” the EU’s antitrust chief Margrethe Vestager noted in a media interview.
Mastercard also issued a press release Thursday confirming they had received a statement of objections from the European Commission regarding their policies on interchange fees. MasterCard said that it will be formally responding to the charge in the near future and plans to work with the commission on the issues in a constructive dialogue.
“Throughout this procedure we have kept the needs of both consumers and merchants in mind and aim to further encourage the uptake of electronic payments inside and outside the European Union,” a spokesperson for the firm noted.