Eu imposes 570 million euro fine on mastercard

Eu imposes 570 million euro fine on mastercard

Credit card provider mastercard must pay 570 million euros for violating EU antitrust rules. This was announced by the EU commission in brussel. The U.S. Group could also face claims for damages.

The background is the so-called interchange fee. When consumers use a credit card in a store or on the internet, the merchant bank pays the cardholder’s bank this fee. The merchant bank can pass it on to the individual trader, who includes it in the final price. The costs can ultimately be passed on to all consumers, including those who do not shop with credit cards.

"European consumers use payment cards every day when they buy food or clothes or order something on the internet. Mastercard’s rules have prevented merchants from taking advantage of better terms from banks in other member states," said EU competition commissioner margrethe vestager. "The costs of card payments have been artificially inflated – to the detriment of consumers and retailers in the eu."

According to the EU commission, mastercard – the second-largest card payment system in europe – violated EU law until 2015. Under mastercard’s rules, merchant banks had until then to apply the fees of the country in which the individual merchant was established. Interchange fees were harmonized across europe at the end of 2015. Until then, they differed considerably from country to country. Handlers in EU countries with high fees were therefore forced to charge higher costs.

The brussels authorities now concluded that this led to an artificial restriction of the EU internal market and a restriction of cross-border competition. Mastercard has acknowledged the violations and cooperated with the competition watchdogs, it said. Therefore, he said, the money jack had been reduced by 10 percent.

The EU commission also pointed out that individuals and companies affected by the anti-competitive behavior could sue for damages in the courts of the individual EU member states. The decision of the brussels authority is binding proof that the breach of law has taken place. The fine imposed by the competition authorities would not be deducted from the final price in case of doubt.

The eu commission also continues to investigate mastercard for purchases made in europe with auber european credit cards. Mastercard – and visa, which is also affected – offered in december to reduce these fees.

The bank fees for purchases in europe with european credit cards are not capped. The competition authorities cited the example of an american tourist who pays for a meal in belgium by card. The authority fears that here, too, the fees will affect the prices for the end consumer. A decision could be made in the next few weeks.

The federal association of consumer centers now buried the decision of the EU commission. Ulrich binnebobel, payment expert of the german retail association (HDE), also raised the question of whether the interchange fees were legal at all. "This is a business of the banks among themselves at the expense of third parties. The trader can’t negotiate," he told the deutsche presse-agentur.

Since 2015, a maximum 0.3 percent surcharge has been allowed for credit card payments throughout europe. Previously, up to two percent had been dropped, said binnebobel. "For a 100 euro purchase, merchants have to pay 30 cents to the customer’s card-issuing bank."Ultimately, customers pay this via the purchase price. Binnebobel did not rule out the possibility that individual traders might now consider claiming damages for the period up to 2015.

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