Antitrust: Commitments by Mastercard and Visa to cut inter-regional interchange fees

The European Commission has made commitments offered by Mastercard and Visa legally binding under EU antitrust rules. The companies will significantly reduce (on average by around 40%) their multilateral interchange fees for payments in the EEA with consumer cards issued elsewhere.

When a consumer uses a debit or a credit card in a shop or online, the bank of the retailer (the “acquiring bank”) pays a fee called “multilateral interchange fee” (“MIF”) to the cardholder’s bank (the “issuing bank”). The acquiring bank passes this fee to the retailer who includes it, like any other cost, in the final prices to all consumers, even to those who do not use cards.

Inter-regional interchange fees (also referred to as “inter-regional MIFs”) are MIFs applied to payments made in the European Economic Area (EEA) with consumer debit and credit cards issued outside the EEA. This would be the case, for example, when a US tourist uses a Mastercard or Visa card to pay a restaurant bill in Belgium.

Both Mastercard and Visa have now committed to reduce their respective inter-regional MIFs. These commitments, which will cut the inter-regional MIFs by on average 40%, will significantly reduce the costs for retailers in the EEA when they accept payments made with cards issued outside the EEA. This is expected to lead to lower prices to the benefit of all European consumers.

The Commitments

Mastercard and Visa, each separately, offered commitments that would reduce the inter-regional MIFs by an average of 40%. Under the commitments, each of Mastercard and Visa undertake to:

1. Reduce the current level of inter-regional interchange fees to or below the following binding caps, within six months:
   – For card payments carried out by the cardholder in a shop (“Card Present Transactions”): o 0.2% of the value of the transaction for debit cards; o 0.3% of the value of the transaction for credit cards. – For online payments (“Card Not Present Transactions”): o 1.15% of the value of the transaction for debit cards; o 1.50% of the value of the transaction for credit cards.
2. Refrain from circumventing these caps by any measure equivalent in object or effect to inter-regional MIFs
3. Publish all inter-regional interchange fees covered by the commitments in a clearly visible manner on their respective websites.

Background

Article 101 TFEU and Article 53 of the EEA Agreement prohibit anticompetitive agreements and concerted practices, which may affect trade and prevent or restrict competition.

Article 9 of the EU’s Antitrust Regulation (Regulation EC (No) 1/2003) allows the Commission to conclude antitrust proceedings by accepting commitments offered by a company. Such a decision does not reach a conclusion on whether EU antitrust rules have been infringed but legally binds the company to respect the commitments.

If a company breaches such commitments, the Commission can impose a fine of up to 10% of the company’s worldwide turnover, without having to find an infringement of the EU antitrust rules. A policy brief on commitment decisions under Article 9 is available here.

More information

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Case Visa: AT 39398

Case Mastercard: AT 40049