Sunday

31st Jul 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.

EU free movement must be curbed, UK says

British leader Theresa May has said free movement of EU workers to Britain cannot continue as in the past, while visiting Slovakia and Poland on Thursday.

Stakeholders' Highlights

  1. Counter BalanceThe Trans Adriatic Pipeline: An Opportunity or a Scam in the Making for Albania?
  2. Dialogue PlatformFethullah Gulen: I Condemn All Threats to Turkey's Democracy
  3. GoogleHelping Emergency Services Find You When You Need It Most
  4. Counter BalanceWhat's New in the Investment Plan for Europe: Business as Usual or True Innovation ?
  5. Belgrade Security ForumMigration, Security and Solidarity within Global Disorder: Academic Event 2016
  6. GoogleHow Google Fights Piracy: Creating Value While Fighting Piracy
  7. EJC"My Visit to Israel" - Opinion by MEP Lopez Aguilar, Chair of the EP Working Group on Antisemitism
  8. World VisionChildren Migrating, Out of School and at Work as Hunger Deepens in Southern Africa
  9. European Healthy Lifestyle AllianceStand-Up (and Exercise) to Prevent Chronic Diseases
  10. Centre Maurits CoppietersLaunches a Real-time News Hub Specialised in EU Stakeholders
  11. GoogleEU-US Privacy Shield: Restoring Faith in Data Flows and Transatlantic Relations
  12. World VisionWorld Leaders & Youth Advocates Launch Partnership to End Violence Vs. Children

Latest News

  1. EU encouraged car industry to cheat, French report says
  2. Terrorism and migration top EU public's concern
  3. Spain's Rajoy warns of minority rule
  4. Car lobby complained about emissions tampering by others
  5. Critical IMF report heralds new Greek bailout battle
  6. EU free movement must be curbed, UK says
  7. EU political pressure alone cannot save the rule of law
  8. Merkel: Attacks won't change refugee policy