MasterCard’s Swipe-Fee Fight Moves to Europe

A massive $5.7 billion settlement last December between the card companies Visa and MasterCard, and merchants seeking lower interchange fees may not have ended the swipe-fee battle.

There’s another fight happening overseas.

The European Union decided in 2007 to cap MasterCard’s swipe-fee, similar to the Durbin Amendment of the Dodd-Frank Act, though this provision only affected debit cards.

MasterCard appealed, though now it appears that the European Commission is likely to reject the appeal and move forward with a fee-cap. The European Court of Justice advised the EC to reject the appeal.

MasterCard, along with HSBC, Royal Bank of Scotland, and Lloyds Banking Group had fought the EC’s ruling that multilateral interchange fees hindered competition in 2012.

According to a statement by Eurocommerce, a retail consortium, “The interchange fee is unseen and non-negotiable and imposes a hidden tax on each card payment. This unfair extra cost puts a 12 billion euro ($16.3 billion) per year burden on retailers and inflates prices for all European consumers.”

MasterCard Europe’s President, Javier Perez countered in a statement, “The consumer—that is you and me—will be the big loser if this opinion is followed by the court. Practical experience in countries such as Spain, Australia and the United States shows that capping interchange shifts the costs for transactions from retailers onto customers.”

Merchants and regulators are fighting back against card fees, but it remains to be seen if consumers will truly benefit from fee-caps.