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Mastercard has been hit with a €570m (£500m) fine from the European Union (EU) for breaching the single market rules by limiting retailers’ ability to benefit from better interchange fee rates offered by banks in other countries.
Following an investigation by the European Commission in 2013, the findings of which were announced in 2015, Mastercard has changed its policy.
Interchange fees are charged by the bank of the person making the purchase, using a card in person or online, to the bank of the retailer. The fee is then passed on to the retailer and, finally, the consumer.
The EU single market allows retailers to use banks across the EU to access lower rates, but Mastercard’s rules meant retailers’ banks had to apply fees set in the country where the retailer was based. This put retailers operating in countries with higher interchange fees at a disadvantage.
Commissioner Margrethe Vestager said in a statement: “European consumers use payment cards every day, when they buy food or clothes or make purchases online. By preventing merchants from shopping around for better conditions offered by banks in other member states, Mastercard’s rules artificially raised the costs of card payments, harming consumers and retailers in the EU.”
According to the commission, the investigation found that Mastercard’s cross-border acquiring rules meant retailers paid more in bank services to receive card payments than they would had they been free to shop around for lower-priced services. This led to higher prices for retailers and consumers, to limited cross-border competition and to an artificial segmentation of the single market, it said.
Celent analyst Gareth Lodge said: “The size of the fine reflects the commission’s view of the situation, including the value of sales relating to the infringement, the gravity of the infringement and its duration, as well as the fact that Mastercard cooperated fully.”