Boston, MA 04/10/2013 (wallstreetpr) – The European Union is investigating MasterCard Inc (NYSE:MA) (Closed: $527.64, down by 1.26%) over the bank fees that are charged by it for debit and credit card payments made by bank customers who are based outside its 27-nation bloc. The competition watchdog in the EU, the European Commission said that it had started an investigation. This investigation will be looking into the possibility of any distortions in competition with reference to the interbank arrangements for fees. It will also be probing some other practices that are being followed by MasterCard. All this comes at a time when over 40 percent of annual non-cash payments are being made via card by a large number of individuals and businesses.
A dozen lawsuits
In a statement the Commission said that for example, when an American tourist uses his MasterCard credit card in Europe to make a purchase, these fees are applied. The charges that apply for processing foreign payments are much higher than those that apply to cards from within the European Union said Antoine Colombani the EU spokesperson in Brussels. This investigation is increasing the pressure on MasterCard over card fees that are charged in Europe. At the moment, the Purchase, New York-based Company faces close to a dozen lawsuits there over its cross-border fees. In 2007 the EU had found that MasterCard had unjustly exaggerated the transaction fees that are paid by retailers for processing of payments.
Also under scrutiny will be the MasterCard rules that apply to transactions that are carried out by merchants, which restrict them from taking advantage of better conditions that are provided by banks in other locations in the EU.
New rules in the pipeline
MasterCard said that it will extend full cooperation to the commission and that its stand as a global electronics payment company is based on maintaining equilibrium in its dealings with its customers and retailers in an effort to make sure that each party’s payments are commensurate with the benefits they receive. In addition to the anti-trust investigation the commission will also be proposing some new rules before the summer. These will seek greater certainty on the fees that the Interbank receives right across the EU. Also under anti-trust investigation is Visa Europe ltd which is the largest payment card network in the EU.