MasterCard Europe suspends cross-border interchange fees

MasterCard Europe suspends cross-border interchange fees

MasterCard is suspending the interchange fees it charges for cross-border credit and debit transactions in Europe in order to comply with an EC ruling and avoid heavy daily penalties.

The European Commission (EC) said last December that the multilateral interchange fees (MIF) charged for cross-border transactions made with MasterCard and Maestro debit and credit cards violated EC Treaty regulations.

MasterCard was given until 21 June 2008 to withdraw the fees or incur daily penalty payments of 3.5% of its daily global turnover in the preceding business year.

"We said in December that although we strongly disagree with the European Commission's decision, we would comply with it," says Javier Perez, president, MasterCard Europe.

MasterCard says the transactions affected by its move "amount to less than five percent of MasterCard Europe volume" and it does not anticipate any significant near-term financial impact.

Although MasterCard is complying with the deadline, it says it is continuing negotiations with the EC about "an interchange fee methodology that the Commission services believe is consistent with the decision".

"Despite our having made several proposals to reduce substantially cross-border consumer interchange fees, we have not yet reached an understanding with the Commission services on future steps," says Perez. "Therefore, in order to ensure our compliance with the decision, we have taken this action while we continue discussions with them."

Perez says MasterCard will also continue to "vigorously pursue" its appeal of the decision to the European Court of First Instance, which it filed on 1 March.

In a statement responding to MasterCard's action, EC Competition Commissioner, Neelie Kroes, says: "Irrespective of MasterCard's move to temporarily repeal its cross-border MIF, the Commission will continue to be open to assess any new proposals from MasterCard concerning systems to ensure both efficient payments and a fair share of the benefits for consumers and retailers."

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