April 9 (Bloomberg) -- MasterCard Inc. faces a European Union antitrust probe into bank fees on foreign card payments such as when tourists go shopping in the 27-nation bloc.
The European Commission said the levies -- and other possible practices including higher fees for traders accepting so-called premium cards aimed at affluent customers -- may be anti-competitive, slowing down cross-border business and harming customers through higher prices.
“They are restrictive rules that need to be removed,” said Ruth Milligan, senior adviser on payments at EuroCommerce, a group representing EU retailers including Carrefour SA and Ikea Group, the world’s biggest home-furnishings seller. “They are things we’ve been campaigning about for a long time.”
The probe increases the pressure on the Purchase, New York-based company over card charges in Europe. The company faces about a dozen lawsuits in the U.K. over cross-border fees and a previous EU decision in 2007 found that MasterCard unfairly inflated the transaction fees paid by retailers for processing payments. The EU regulator said it will also examine MasterCard rules applying to merchants’ transactions that stop them benefiting from better conditions by banks elsewhere in the bloc.
“MasterCard intends to fully cooperate with the commission,” it said in an e-mailed statement. “As a global electronic payments company MasterCard always aims to balance the interests of both consumers and retailers to ensure that each party pays its fair share of the costs for the benefits it receives.”
The EU regulator said part of its probe is examining MasterCard’s so-called “honor all cards” rule, which obliges a merchant to accept all types of cards from the company, including premium products bundled with add-ons such as insurance and travel services.
Banks, especially in the U.K., “are simply issuing people with new premium cards that carry a higher interchange fee,” said Milligan.
The commission plans to propose rules to create more certainty across the EU on interchange fees “in the coming months,” Chantal Hughes, a spokeswoman for Michel Barnier, the EU’s financial-services chief, said in an e-mail.
The proposal seeks to tackle “multi-lateral interchange fees between banks hindering cross-border competition” and “rules imposed by card schemes that limit the capability of merchants not to accept premium cards associated with higher costs,” the commission said on its website.
Visa Europe Ltd., operator of the EU’s largest payment-card network, is also being investigated and was sent an antitrust complaint over its cross-border credit-card payment fees by the commission last year. An earlier probe into Visa Europe’s fees for debit-card payments made outside a user’s home country was settled in 2011. The company split from Visa Inc. before the U.S. card company’s initial public offering in early 2008.
While MasterCard agreed to fee changes in 2009 in a settlement with the Brussels-based EU regulator to avoid a daily penalty of as much as 3.5 percent of sales, it appealed the antitrust decision. The EU General Court last year backed the commission’s decision.
MasterCard, the second-biggest card network, supported by banks including HSBC Holdings Plc and Royal Bank of Scotland Group Plc, had argued that its fees are “necessary for the viability of its global debit- and credit-card scheme.” It has a final appeal in that case pending at the EU’s highest court.
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