E.C. Probes MasterCard Interchange

Interchange fees in the credit card industry remain under fire as the European Commission examines whether to end MasterCard's cross-border interchange fees on the basis that they are a restrictive business practice.

The question is whether the fees, which are charged by issuer banks but have minimums set by the card company, hurt competition within banks by stopping their ability to undercut one another's prices. MasterCard, which will present its case to the commission in a hearing later this year, stands behind the practice, saying it's needed to compete with other payment providers.

Such fees are under scrutiny across the globe, and governments in some countries, such as Australia, have decided to regulate them. Although they are the targets of merchant lawsuits in the United States, analysts maintain that step is unlikely here.

"The Federal Reserve would answer that they do not see government interference in the United States as it relates to discounts and interchange," said Alan Schultheis, director of Edgar, Dunn and Co. "In time, who knows, but it's not imminent."