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EU drops fines threat against MasterCard
Source: Agencies |
April 1, 2009, Wednesday
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Online Edition
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EUROPEAN Union regulators said today they would drop a threat to fine MasterCard after the company promised to cut fees it charges for cross-border card purchases which can hike costs for shops.
In December 2007, the European Commission threatened the company with daily fines unless it dropped the multilateral interchange fees that can discourage retailers from accepting payment cards from another EU nation.
Regulators say they will now monitor how MasterCard changes the way it charges these fees, which should from July be capped at 0.3 percent for credit card purchases and at 0.2 percent for debit card sales.
These fees varied from 0.8 percent to 1.9 percent for credit cards in 2007 and from 0.4 percent to more than 0.75 percent for debit cards.
MasterCard has also promised to be clearer about how shoppers and retailers are charged for the payment cards they use and accept. The EU executive said shops will be offered and invoiced different rates for the type of card used.
MasterCard will also drop a new fee system it wanted to charge banks to issue its cards.
The EU executive warned that it was still investigating Visa, which was keen to stick to an average 0.7 percent interchange fee for processing credit and debit card payments outside the cardholder's country.
Europeans make more than 23 billion card payments every year worth over 1.35 trillion euro(US$1.79 trillion). EU officials say the extra costs for using cards in another European nation holds back efforts to create a single market out of the EU's 27 member countries.
In December 2007, the European Commission threatened the company with daily fines unless it dropped the multilateral interchange fees that can discourage retailers from accepting payment cards from another EU nation.
Regulators say they will now monitor how MasterCard changes the way it charges these fees, which should from July be capped at 0.3 percent for credit card purchases and at 0.2 percent for debit card sales.
These fees varied from 0.8 percent to 1.9 percent for credit cards in 2007 and from 0.4 percent to more than 0.75 percent for debit cards.
MasterCard has also promised to be clearer about how shoppers and retailers are charged for the payment cards they use and accept. The EU executive said shops will be offered and invoiced different rates for the type of card used.
MasterCard will also drop a new fee system it wanted to charge banks to issue its cards.
The EU executive warned that it was still investigating Visa, which was keen to stick to an average 0.7 percent interchange fee for processing credit and debit card payments outside the cardholder's country.
Europeans make more than 23 billion card payments every year worth over 1.35 trillion euro(US$1.79 trillion). EU officials say the extra costs for using cards in another European nation holds back efforts to create a single market out of the EU's 27 member countries.
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