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European Court vindicates ban on anti-competitive card fees


24 May 2012



The European Court has today upheld the Commission’s 2007 decision on MasterCard, ruling that the MIF set ‘a floor under the costs charged to merchants and thus constituted a restriction of price competition that was to their detriment.’

EuroCommerce and the European Retail Round Table (ERRT) applaud this excellent ruling. EuroCommerce Director-General Christian Verschueren said, “We are delighted with this decision, which wholly vindicates retail’s ten-year campaign against these anti-competitive fees. We now call on the Commission to follow this up with radical and decisive regulatory solutions to make payments in Europe truly competitive.”

EuroCommerce and ERRT commend the court on its unequivocal rulings on the economic basis of the multilateral interchange fee (MIF): these clearly show that the court upholds the Commission’s view on the anti-competitive nature of the MIF. The retail sector has long argued that the MIF is an unseen and non-negotiable burden for merchants and the Commission’s own figures show that card transactions cost EU merchants €25 billion per year.

Dennis Kredler, Director-General of the European Retail Round Table (ERRT) added, “This ruling is excellent news. We now need a robust methodology to regulate how the costs for payment card services are calculated and allocated. The Green Paper on mobile card and internet payments is an excellent opportunity to establish an obligation on card companies to offer a basic payment service.”

What happens next?

The Court’s judgment means that the MasterCard cross-border MIF is contrary to EU competition law and must be removed. We also trust that the national competition authorities will now follow the European Court’s lead. However, a long-term business model must still be found, through regulatory measures already begun by the Commission Green Paper on Payments. We urge the Commission to tackle the business model issue head-on; solving the associated issues of cross-border acquiring, the honour all cards rule (HACR) and transparency would be simply not enough. We call on the Commission to implement the basic payment service model.

Basic payment service

The MIF burdens the retail sector with the excessive cost of bundled services from which the merchant does not benefit. We therefore advocate the stripping away of all these extra services and the creation, by regulation, of a mandatory basic payment service. This service, which should exist on each and every SEPA payment card, would offer consumers and merchants the facility to make a payment, which would carry a fee for the service but would not have a MIF. In short, we advocate the unbundling of the basic payment operation from all other additional services which may be offered by a payment scheme.


In 1997, EuroCommerce lodged complaints with the European Commission against EuroPay (now part of MasterCard Incorporated) and Visa. Ten years later the European Commission issued a decision which confirmed that: 1) MasterCard’s MIF, in effect, sets a minimum price that merchants must pay to their acquiring bank, and therefore infringes Article 101(1) of the Treaty of the European Union and 2) MasterCard failed to show that the conditions (in essence efficiency) of Article 101 (3), which give exemption from the Article 101 prohibition, were satisfied. In 2007, the Commission ruled that MasterCard’s MIF was in breach of European competition law and ordered the card scheme to remove it. As a consequence, MasterCard set its cross-border MIF to zero in 2008, but appealed the Commission decision. The European Court has now rejected that appeal and upheld the Commission decision. MasterCard can still appeal to the higher court on a point of law.


For media enquiries, please contact:

Marjolein Raes

Director, Advocacy & Communications

Tel: +32 2 737 05 99

Further information:

MIF: Multilateral interchange fees are charged by a cardholder's bank to a merchant's bank for each sales transaction made with a payment card. They are either agreed bilaterally, between issuing and acquiring banks, or multilaterally, by means of a decision binding all banks participating in a payment card scheme. A MIF can be a percentage, a flat fee or combined percentage and flat fee. Interchange fees are one of the sources of revenue for issuing banks from payment cards (others include annual fees, interests for the use of a credit facility, late payment fees, currency exchange fees, etc.).

Tourist test: This test, (otherwise known as the ‘merchant indifference test’) is an economic methodology to determine an appropriate level for a card fee, based on the cost to the retailer of accepting cash. The theory is that the card fee level should be set so that the cost to the merchant is the same whether a card or cash is used. To find this level, the Commission is conducting a ‘cost of cash’ study. EuroCommerce argues that cash is not an appropriate bench-mark for electronic payments, which have the potential to be much cheaper.

Basic Payment Service: EuroCommerce proposes that all SEPA cards should contain a basic, guaranteed payment option which allows a simple transfer of funds from the consumer’s bank account to the merchant’s account - similar to a debit card application. Under the ‘user pays principle’, the Basic Payment Service would have a cost to the customer, which would not be subsidised by the merchant. Any additional services (e.g. gifts, additional insurance, free credit, deferred debit) would be optional, negotiated between the cardholder and his bank and charged at a cost set by the banks (competing with other banks) directly to the beneficiary of the service. The model therefore does not entail the banning of any business model. For a full explanation of the basic card service, see the EuroCommerce reply to the Green Paper on Payments.

MasterCard IPO: In 2006 MasterCard undertook an initial public offering (IPO) or a flotation on the stock exchange. This changed the legal ownership of MasterCard from a membership group (‘association of undertakings’) to a single legal entity.

SEPA: The Single European Payments Area is an initiative to harmonise payments across the European Union. Its legal basis is the Payment Services Directive and it was designed to be implemented by the market, led by the European Payments Council. Delay in the process has led to end-dates being set by Regulation 260/2012.

EuroCommerce and the commerce sector

EuroCommerce represents the retail, wholesale and international trade sectors in Europe. Its membership includes commerce federations and companies in 31 European countries.

Commerce plays a unique role in the European economy, acting as the link between manufacturers and the nearly 500 million consumers across Europe over a billion times a day. It is a dynamic and labour-intensive sector, generating 11% of the EU’s GDP. Over 95% of the 6 million companies in commerce are small and medium-sized enterprises. The sector is a major source of employment creation: 31 million Europeans work in commerce. It also supports millions of dependent jobs throughout the supply chain from small local suppliers to international businesses.

European Retail Round Table (ERRT)

The European Retail Round Table was established to express the views of large retailers on a range of issues of common interest focused on EU public policy. Their businesses operate worldwide and represent a cross-section of the retail sector. Collectively, ERRT members have a turnover of more than €400 billion and employ 2.3 million people in over 40,000 stores. ERRT Members: Asda Walmart, C&A, Carrefour Group, Delhaize Group, El Corte Inglés, H&M, IKEA, Inditex, Marks & Spencer, Mercadona, Metro Group, Royal Ahold and Tesco.


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