European Union accused MasterCard, a U.S. colossal credit card and financial service corporation, of overcharging clients and retailers alike.
The European Commission, in its preliminary declaration of objections, were convinced that MasterCard breached EU's solitary market competition regulation.
European Union Commission's two-year investigation revealed that MasterCard breached EU's antitrust directive by how banks make charges to cover costs in managing transactions or its interchange fees. Such costs affect everyone involve in the credit card system — the credit card holders, the retailers and even customers who pay in cold cash.
When a consumer uses a credit card to purchase online or in physical stores, the retailer bank establishment settles the interchange fee to the bank of the cardholder. The said fee gets shouldered by the retailer, who then increases the price of goods and services to cover the costs. Thus, even if customers pay in cash, they will still feel the impact made by higher prices from merchants and service providers, as detailed by The Christian Science Monitor.
EU Competition Commissioner Margrethe Vestager stated, "Many consumers use payment cards every day, when they shop for food, clothes or purchase anything online. We currently suspect MasterCard is artificially raising the costs of card payments, which would harm consumers and retailers in the EU."
She then continued, "We have concerns both in relation to the rules MasterCard applies to cross-border transactions within the EU, as well as the fees charged to retailers for receiving payments made with cards issued outside Europe," as per a report from The Economic Times.
EU antitrust monitors have singled out swipe charges on debit and credit cards for more than ten years. They warned that the way fees are collectively approved is not pro-competitive.
According to Business Day Live, another credit card company, Visa Europe, also had an issue with its costing system with the Brussels-based department. Visa Europe promised to cut levies for handling payments via credit cards that would lower it by 40 to 60 percent.
European Union had previously accused MasterCard of starting a "mad campaign" that sought the derailment of the rules.
