MasterCard Agrees To Cut Cross-Border Interchange Fees In Europe

MasterCard this week agreed as part of an antitrust case settlement with the European Union to cut interchange fees for cross-border payments in Europe and repeal price increases it made on the fees last year.

European Competition Commissioner Neelie Kroes on Wednesday released a statement saying that MasterCard had agreed to three conditions, to be met by July, in response to a December 2007 decision by the commission that said the fees were in breach of EU antitrust laws. MasterCard will cap the weighted average cross-border interchange fee at 0.3 percent for credit card transactions, which previously were between 0.8 percent and 1.9 percent, and at 0.2 percent for debit card transactions.

MasterCard also agreed to repeal related price increases it made in October 2008, and the network plans to make its rules more transparent, according to Kroes.

Interchange fees are a key source of revenue for card suppliers that fuel rebates, although merchants said that high fees also force up prices. The agreement "will mean lower charges for retailers accepting payment cards, which should in turn be passed on to consumers, both those paying with cards and those paying cash," Kroes said.

Kroes also said the commission continues to investigate similar practices by Visa and that the decision would not give the rival network an advantage. "We are determined to keep a level playing field in these markets," she said.

MasterCard, which was not available for comment, plans to appeal the ruling.