26th Oct 2016

Mastercard set to lose legal battle with EU over payment fees

  • Mastercard looks set to fail in its bid to overturn a cap on card fees (Photo: Alan C.)

US credit card giant Mastercard looks set to lose its legal battle against an EU cap on its payment fees, following a legal opinion from the European Court of Justice.

The dispute follows a Commission ruling in 2007 ordering Mastercard to repeal its card interchange fees in the EU on the grounds that the fees were too high and flouted competition rules.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

Mastercard challenged the decision, which was upheld by the EU's General Court, the bloc's second highest court, in 2012.

However, this legal bid now looks likely to be thrown out by the Luxembourg-based court.

"I propose that the court should dismiss the main appeal (by MasterCard) and the cross-appeals," stated Advocate General Paolo Mengozzi in a legal opinion published Thursday (30 January).

Although the opinion is not binding on the court they are rarely overruled by judges.

Retailers, who are hit by the charges whenever they process debit and credit card payments, say that that Mastercard and Visa use their market position to charge exorbitant fees which are then passed on to consumers.

For its part, Mastercard claims that, if upheld, the ruling would hit customers' wallets.

"Practical experience in countries such as Spain, Australia and the United States shows that capping interchange shifts the costs for transactions from retailers on to consumers," MasterCard President Javier Perez said in a statement, adding that "a one-size-fits all approach to interchange across Europe will drive the cost of cards up for consumer."

The EU payments market, dominated by Mastercard and Visa Europe, is worth €130 billion per year, over 1 percent of the bloc's GDP.

But lawmakers have been trying to crack down on the charges for years.

In July EU financial services commissioner Michel Barnier unveiled plans to re-write the bloc's payment services directive that would cap charges for card payments to 0.2 percent and 0.3 percent for debit and credit cards respectively.

At present, average fees range from around 0.2 percent in Denmark and the Netherlands to over 1 percent in Germany, Hungary and Poland.

The commission plan, which is aimed at knocking €6 billion off card fees across the bloc each year, also includes provisions for a legal split between payment card systems and the companies that process transactions, a move it says will boost competition.

MEPs are expected to vote on the bill in February, leaving just two months to reach an agreement with ministers before the end of the current legislative term.

Stakeholders' Highlights

  1. EU-China ForumDebating the Future of the EU-China Relations on 28 November in Prague
  2. COMECEMigrants: From Fear to Compassion
  3. Birdlife EuropeBusiness as Usual - Juncker Snubs Environment and Protects Broken CAP
  4. EFADraft Bill for a 2nd Scottish Independence Referendum
  5. UNICEFCalls on European Council to Address Plight of Refugee and Migrant Children
  6. ECTAJoin us on 9-10 November in Brussels and Discover the new EU Digital Landscape
  7. Access NowCan you Hear me now? Verizon’s Opportunity to Stand for Global Users
  8. Belgrade Security ForumMeaningful Dialogue Missing Not Only in the Balkans, but Throughout Europe
  9. EuropecheEU Fishing Sector Celebrates Sustainably Sourced Seafood in EU Parliament
  10. World VisionWomen and Girls Urge EU Leadership to Help end Gender-based Violence
  11. Belgrade Security ForumGet the Latest News and Updates on the Belgrade Security Forum @BelSecForum
  12. Crowdsourcing Week EuropeMaster Crowdsourcing, Crowdfunding and Innovation! Conference 21 November - 10% Discount Code CSWEU16