In December 2007 the EC ruled that multilateral interchange fees (MIF) charged for cross-border transactions made with MasterCard and Maestro debit and credit cards "violate EC Treaty rules on restrictive business practices".

The card giant was ordered to scrap the fees within six months or face massive fines of 3.5% of its daily consolidate turnover.

MasterCard launched its legal action, with the support of several of the continent's biggest banks, including RBS, HSBC and Lloyds TSB, arguing that MIFs were vital for the viability of its programme.

However, in a statement, the court says that it "does not accept the arguments relating to the objective necessity of the MIF to the operation of the MasterCard payment system".

Says the court: "The methods of setting the MIF tended to overestimate the costs borne by the financial institutions on issuing payment cards and, moreover, inadequately to assess the advantages which merchants derive from that form of payment."

Under the ruling, MasterCard will be forced to maintain fees at 0.2% for debit and 0.3% for credit cards for cross-border puchases, roughly half the fees levied before the EC's intervention.

Responding to the news, Javier Perez, president, MasterCard Europe says: "MasterCard balances the interests of both consumers and retailers, so that each party pays its fair share of the costs for the benefits it receives. Today's ruling, if it stands, would upset that sharing and tip the balance decidedly against consumers.

"It would also threaten the continued delivery of the most advanced electronic payment technologies in Europe which, in turn, are essential to facilitating business and driving economic growth."

The European Commission is now expected to turn its attention to MasterCard rival Visa, and the fees chaged by he card scheme for cross-border payments using its credit cards. Visa has already cut its debit card charges to settle a previous investigation by the Commission into that part of its business