When a consumer uses a debit or credit card in a shop or online, the bank of the retailer (the "acquiring bank") pays a fee called a "multilateral interchange fee" ("MIF") to the cardholder's bank (the "issuing bank"). The acquiring bank passes this fee on to the retailer who includes it, like any other cost, in the final prices to all consumers, even to those who do not use cards.
Inter-regional interchange fees (also referred to as "inter-regional MIFs") are MIFs applied to payments made in the European Economic Area (EEA) with consumer debit and credit cards issued outside the EEA. This would be the case, for example, when a US tourist uses a Mastercard or Visa card to pay a restaurant bill in Belgium.
The Mastercard and Visa networks set the level of MIFs (including inter-regional MIFs) applied by their licensee banks between them. In the absence of bilateral agreements between the banks, the level of the MIFs set by Mastercard or Visa networks applies by default.
The Commission is concerned that inter-regional MIFs may anti-competitively increase prices for European retailers accepting payments from cards issued outside the EEA and in turn lead to higher prices for consumer goods and services in the EEA.
The Commission outlined its competition concerns related to inter-regional MIFs in a Statement of Objections addressed to Mastercard on 9 July 2015 and a Supplementary Statement of Objections addressed to Visa on 3 August 2017.
To address the Commission's competition concerns, Mastercard and Visa have, each separately, decided to offer the following commitments that would reduce the inter-regional MIFs by at least 40%:
1. to reduce the current level of inter-regional interchange fees to or below the following binding caps, within six months of a Commission Decision making the commitments legally binding:
For card payments carried out by the cardholder in a shop ("Card Present Transactions"):
o 0.2% of the value of the transaction for debit cards;
o 0.3% of the value of the transaction for credit cards:
For online payments ("Card Not Present Transactions"):
o 1.15% of the value of the transaction for debit cards;
o 1.50% of the value of the transaction for credit cards.
2. to refrain from circumventing these caps by any measure equivalent in object or effect to inter-regional MIFs.
3. to publish all inter-regional interchange fees covered by the commitments in a clearly visible manner on their respective websites.
The commitments would apply for a period of five years and six months. A trustee would be in charge of monitoring the implementation of the commitments by the two companies.
The Commission invites all stakeholders to submit their views on the commitments within one month of their publication in the EU's Official Journal. Taking into account all comments received, the Commission will then take a final view on whether the commitments address its competition concerns.
If this is the case, the Commission may adopt a decision making the commitments legally binding on Mastercard and Visa (under Article 9 of the EU's antitrust Regulation 1/2003).
Such a decision would not conclude whether there was an infringement of EU antitrust rules but would legally bind Mastercard and Visa to respect the commitments they have offered.
If a company breaks such commitments, the Commission can impose a fine of up to 10 % of the company's worldwide turnover, without having to prove an infringement of the EU antitrust rules.
The full text of the commitments is available on the case website.
Article 101 TFEU prohibits anticompetitive agreements and concerted practices which may affect trade and prevent or restrict competition. The Commission takes the preliminary view that MasterCard and Visa, respectively, and their licensees (who issue MasterCard and Visa branded cards to cardholders or acquire transactions with those cards for retailers) each form an association of undertakings.
Article 9(1) of Regulation EC (No) 1/2003 enables companies investigated by the Commission to offer commitments in order to meet the Commission's concerns and empowers the Commission to make such commitments binding on the companies. Article 27(4) of Regulation EC (No) 1/2003 requires that before adopting such decision the Commission shall provide interested third parties with an opportunity to comment on the offered commitments.
Most card transactions in the EEA are carried out with cards issued in the EEA. The Commission's decisions and Regulatory actions over the past years have capped the interchange fees for those intra-EEA transactions:
In December 2007, the Commission found that MasterCard's interchange fees on cross-border transactions in the EEA (e.g. when a Belgian citizen uses his card to pay in a shop in France) restrict competition between banks. In September 2014, the Commission's findings in the decision were confirmed by the Court of Justice.
In 2009, to comply with the Commission's decision, MasterCard reduced the (intra-EEA) cross-border interchange fees applied by its member banks to maximum weighted averages of 0.2% for debit cards and 0.3% for credit cards.
In December 2010 and February 2014 respectively, the Commission adopted decisions making legally binding commitments offered by Visa Europe (the former Visa scheme association of banks in Europe) to cap at the same levels (0.2% and 0.3%) the interchange fees for all intra-EEA debit and credit card transactions.
In April 2015, the EU's Council of Ministers and the European Parliament adopted the Interchange Fee Regulation, which from December 2015 capped interchange fees for cards issued and used in Europe (maximum of 0.2% for debit cards and 0.3% for credit cards). The Interchange Fee Regulation established a level playing field for the card payments in the intra-EEA transactions. However, the caps of the Regulation do not apply to inter-regional transactions, as the Regulation does not apply to cards issued outside the EEA.
More information, including the full version of the commitments is available on the Commission's competition website, in the public case register under the case numbers AT 39398 (Visa) and AT 40049 (Mastercard).