Case Against MasterCard Dropped By European Union
October 22, 2009
An executive arm of the European Union has dropped a case against the credit card giant MasterCard in relation to the transaction fees that the card network levies. The case has been dropped on the condition that the credit card giant cuts its transaction fees, but this has made many retailers angry, as they were looking for these card fees to be scrapped altogether rather than just being reduced.
MasterCard has said that it has now agreed to halve the fees charged for transactions, but that this was only a temporary measure pending a court appeal. Xavier Durieu, secretary general of retailer lobby EuroCommerce, said: “This temporary settlement sends an extremely negative message to everyone in Europe. This decision is appalling and we count on the Commission to win the court appeal.”
Retailers have been outraged by these fees, and according to reports have claimed that domestic and cross border payment card transaction fees in Europe are amounting to around £11 billion a year. EU Competition Commissioner Neelie Kroes said: “These fees are simply a hidden source of revenue for banks. MasterCard could not justify their level.”
MasterCard officials have said that the agreement to cut the fees on a temporary basis meant that the network could not invest in new products for consumers and retailers and could not sustain string competition within the payments industry in Europe. MasterCard Europe’s president, Javier Perez, said: “That is why these rates are only interim, and why we are pursuing our appeal in the European Court of First Instance.”
Neelie Kroes stated: “We will be monitoring implementation closely in coming months.” She added: “I have no intention that today’s announcement will allow Visa to benefit at the expense of MasterCard.”
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Another case of letting the big boys of the hook, how many politicians are in Mastercard’s back pocket?