EU fines Mastercard €0.6bn for 'restricting cross-border competition'

European competition authorities have fined Mastercard €570m for preventing retailers from being able to shop around for lower-priced bank services in the single market.

Mastercard had, until December 2015, imposed cross-border restrictions on the interchange fee that retailers' banks paid for every consumer transaction in a shop or online, which the cardholder's bank. The costs of this fee are passed onto the retailer.

Interchange fees different considerably between EU member states but Mastercard's rules, until caps on these fees were introduced in 2015, obliged the retailers' banks to apply the interchange fees of the country where the retailer was located, preventing retailers from high-interchange fee countries from accessing from lower interchange fees offered by banks in another states.

After the investigation that began in 2013, the EC found that Mastercard's cross-border rules led to retailers paying more in bank services to receive card payments than if they had been free to shop around for lower-priced services, leading to higher prices for retailers and consumers, as well as limited cross-border competition and to an "artificial segmentation" of the single market.

The Commission ruled that Mastercard breached of EU antitrust rules by preventing retailers from benefitting from lower fees and restricted competition between banks across borders.

Commissioner Margrethe Vestager said: “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.”

The company, which changed its rules in December 2015 after regulation was imposed on interchange fees, got a 10% reduction on the fine for cooperating with the six-year investigation and acknowledging the facts and the infringements of European Union competition rules.