Retailers want more of same after Kroes hits MasterCard

European retailers yesterday (19 December) welcomed moves by Competition Commissioner Neelie Kroes to abolish fees levied on the use of credit and debit cards by MasterCard and called for similar action next year on identical fees charged by Visa Europe.

"When you have twins, you treat them the same way," said Xavier Durieu, secretary-general of retailers’ lobby Eurocommerce, which represents six million shops throughout Europe. "The functionality for the consumers is the same and the service is nearly the same for retailers."

Following yesterday’s Commission decision, MasterCard has six months to scrap its multilateral interchange fees. Failure to comply would lead to daily penalties equivalent to 3.5% of the value of its daily global turnover.

Kroes said that, under the current system operated by MasterCard, consumers often ended up paying twice for use of their cards through annual fees to banks and inflated retail prices. The fees, she said, would have been justified only if they had contributed to technical and economic progress and had benefited consumers.

Yesterday’s decision focused on fees levied on cross-border payments in the European Economic Area and on domestic payments in eight member states (Belgium, Ireland, Italy, the Czech Republic, Latvia, Luxembourg, Malta and Greece).

Visa Europe, which along with MasterCard was the subject of a European Commission investigation that was concluded in 2007, will face further scrutiny after its current exemption from antitrust rules expires on 31 December.

Irish senator Feargal Quinn, who is serving as Eurocommerce’s president, said that he expected Visa would also be given a six-month period to scrap its fees next year. He said that the legal precedent set by yesterday’s decision would also enable national governments to take separate action on interchange fees.

A Visa Europe spokesman said: "Since 2002, we have had an exemption granted by the Commission in relation to our interchange rates. We look forward to understanding the commissioner’s revised thinking and continuing the dialogue on how our rates are set in future. In the meantime, it’s business as usual."

Kroes’s decision on MasterCard does not outlaw all interchange fees. Were MasterCard to introduce a new interchange fee, it would have to demonstrate that there would be clear benefits for consumers in areas such as security of payments or tax fraud.

More than 23 billion payments, with a value of more than €1,350bn, are made every year with payment cards.

European retailers yesterday (19 December) welcomed moves by Competition Commissioner Neelie Kroes to abolish fees levied on the use of credit and debit cards by MasterCard and called for similar action next year on identical fees charged by Visa Europe.