Mastercard challenges 2007 EU ruling on transaction fees

MasterCard Inc. is challenging a 2007 European Union ruling on transaction fees on cross-border credit card payments this week at the EU’s General Court in Luxembourg.

Supported by banks including HSBC Holdings Plc. and Royal Bank of Scotland Group Plc., Mastercard claims that the EU failed to “properly identify a restriction of competition” and demanded a “disproportionate” remedy and fines, according to Bloomberg.

MasterCard, the world’s second largest provider of credit and debit cards, agreed to slash its multilateral interchange fees for cross-border payments in 2009 when the EU threatened to fine it a daily penalty of as much as 3.5 percent of sales.

The rates it accepted are too low, Mastercard says, but the EU said the cuts will save consumers 200 million euros a year.

Worldwide, regulators are going after card fees. The EU said Visa Europe Ltd.’s fees for cross-border credit card and deferred debit transactions could bring an antitrust complaint by the end of the year, according to Bloomberg.

In the U.S., the Federal Reserve recently capped the amount card issuers can charge retailers for debit-card swipe fees.

“The credit-card companies are under enormous pressure to make changes to this very opaque way that they have of doing business,” Paul Skehan, director of the European Retail Round Table, said, according to Bloomberg.

The court decision, which is only deciding on cross-border transaction charges, may spur national competition authorities “to take action,” Ruth Milligan, a legal adviser on payment systems at EuroCommerce said, Bloomberg reports.

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