MasterCard (NYSE:MA) received an antitrust complaint from European Union watchdogs over concerns it is artificially raising card-payment fees.
The European Commission, the bloc’s top antitrust authority, said MasterCard’s rules meant retailers in one EU country couldn’t benefit from lower card fees in another country, thereby restricting competition between banks across national borders.
The EU also alleged that card fees charged for transactions in the EU using MasterCard cards issued outside Europe set “an artificially high minimum price.”
“We have concerns both in relation to the rules MasterCard applies to cross-border transactions within the EU, as well as the fees charged to retailers for receiving payments made with cards issued outside Europe,” the EU’s antitrust chief Margrethe Vestager said in a statement today.
The fees charged when a Chinese tourist, for instance, uses their card to pay a restaurant bill in Brussels are up to five times higher than those paid when a consumer uses a card issued in Europe, the commission said.
“We currently suspect MasterCard is artificially raising the costs of card payments, which would harm consumers and retailers in the EU,” the bloc’s antitrust chief Margrethe Vestager said in a statement.
The credit card company said it was "working with the European Commission on the issue" and was preparing a formal response.
"Throughout this procedure we have kept the needs of both consumers and merchants in mind," MasterCard said.
The charges, which follow a two-year investigation, are the latest step in a series of legal battles between the EU and U.S.-based credit card companies over fees. A parallel EU investigation into Visa’s (NYSE:V) card fees, opened three years ago, is ongoing.
The probes could lead to hefty fines of up to 10 percent of global annual revenue, or $950 million for MasterCard, and require the companies to change their business practices.
EU regulators have been investigating interchange fees -- the fees retailers pay banks to process card payments -- for more than a decade, amid concerns that such fees harm competition in the bloc’s single market for goods and services. The EU says such fees are passed on to all consumers, even those who pay cash, because retailers include them in their general costs.
In September the EU’s top appeals court upheld a 2007 decision by the commission ordering MasterCard to withdraw fees for cross-border transactions in Europe.
In response, MasterCard capped its cross-border fees at 0.2 percent for debit cards and 0.3 percent for credit fees in 2009, but didn’t reduce other card fees, the commission said.
The EU subsequently approved an offer by Visa Europe to cap its cross-border fees at the same level.
Shares of MasterCard rose 1 percent to $93.42 at 10:30 a.m. in New York.