MasterCard faces anti-trust probe over cross-border fees

MasterCard Inc faces an EU anti-trust probe into bank fees on foreign card payments such as when tourists go shopping in the 27-nation bloc.

The European Commission, the EU’s competition watchdog, said it opened a probe into possible “competition distortions” in interbank arrangements on fees and other practices at a time when European consumers and businesses are making more than 40% of their non-cash payments a year by card. Preventing such violations is a priority, it said.

“Such fees apply, for example, when a US tourist uses his MasterCard credit card to make a purchase” in Europe, the commission said yesterday. Charges for processing foreign payment are much higher than for ones made with cards from within the EU, said spokesman Antoine Colombani.

The probe increases the pressure on the New York-based company over card charges in Europe. It faces about a dozen lawsuits in the UK over cross-border fees. A previous EU decision in 2007 found MasterCard unfairly inflated transaction fees paid by retailers for processing payments. The regulator will also examine MasterCard rules on merchants’ transactions that limit them from benefiting from better conditions by banks elsewhere in the EU.

“MasterCard intends to fully co-operate with the commission,” it said. “As a global electronic payments company MasterCard always aims to balance the interests of both consumers and retailers to ensure that each party pays its fair share of the costs for the benefits it receives.”

The commission also said it plans to propose rules that seek to create more certainty on interbank fees across the EU.

Visa Europe Ltd, operator of the largest payment-card network in the EU, is also being investigated and was sent an antitrust complaint over its cross-border credit card payment fees by the EC last year.

The 2007 commission decision against MasterCard was backed by the EU General Court last year. MasterCard is appealing the ruling at the EU’s highest court.

MasterCard argued the so-called multilateral interchange fees are crucial for sharing the costs of debit and credit card payments.