MasterCard told to scrap cross-border fees
Consumers could save as much as £7bn a year after MasterCard was told to ditch the fees it charges on cross-border payments.
After a detailed investigation, MasterCard’s multilateral interchange fees (MIF) have been deemed a violation of European rules by the European Commission. It now has six months to scrap the fees or face potential daily penalty payments of 3.5% of its global turnover.
A MIF is a fee charged by a cardholder's bank to a merchant's bank every time the card is used to make a payment. The charge is made on most cross-border payments in Europe but the European Commission found that this fee is being passed on to consumers through inflated product costs and offers no benefits.
Neelie Kroes, competition commissioner, says: "MIF agreements such as MasterCard's inflate the cost of card acceptance by retailers.
“Consumers foot the bill, as they risk paying twice for payment cards - once through annual fees to their bank and a second time through inflated retail prices paid not only by card users but also by customers paying cash.
“The European Commission will accept these fees only where they are clearly fostering innovation to the benefit of all users."