European Commission close in on interchange fees deal with card networks

Visa and Mastercard have offered to cut merchant interchange fees for non-EU credit and debit cards by at least 40% to end an EU antitrust investigation, part of a decades-long crackdown by the European Commission against such interchange fees – The EC argued that interchange fees result in higher consumer prices.

European Commission close in on interchange fees deal

The two largest card networks have proposed a 0.2% fee on debit card payments carried out in shops and a 0.3% fee on credit card payments, the Commission said.

The changes would bring their interchange fees in line with those charged for EU cards, which were also the subject of a lengthy EU investigation, triggered by a 1997 complaint by business lobbying group EuroCommerce.

For online payments, debit card charges would be 1.15% and 1.50% for credit cards. The case affects foreign tourists using their cards in the 28-country bloc. The commitments would apply for five-and-a-half years.

Third parties have a month to provide feedback before the Commission decides whether to accept the offer which would be valid for five years and six months or demand a bigger fee reduction.

Mastercard said it expected to incur a $650 million (£507.02 million) charge in Q4 2018 because of a substantial fine related to a second EU antitrust investigation.

The Commission three years ago charged the company with imposing rules which blocked banks in one EU country from offering lower interchange fees to a retailer in a second EU country.

“The case is still ongoing and we cannot comment further on it,” Commission spokesman Ricardo Cardoso said.