Mastercard and Visa have both agreed to cut their fees on payments made with foreign-issued debit and credit cards in the European Union – the latest twist in an EU antitrust investigation.
The European Commission says that interchange fees, where the merchant’s bank pays a charge to the cardholder’s bank, result in higher prices for consumers.
While these fees are a lucrative source of revenue for banks, they are ultimately passed on to the merchant.
Visa, the world’s largest payments network operator and Mastercard, its closest rival, will now cut such fees by an average of 40 per cent, the European Commission said.
This will be welcome news for the Commission, who have waged a decades-long crackdown on payment and credit card fees.
This culminated in Mastercard being fined €570million in January this year for limiting the ability of retailers and banks to shop around between member states to offer lower fees which therefore restricted competition between banks and raising payment costs for retailers and customers.
