On 9th July 2015, the European Commission sent a ‘Statement of Objections’ to MasterCard, saying they may be breaching European antitrust rules. One of the Commission’s concerns was that MasterCard’s rules currently limit the ability of a retailer in a country with a high interchange fee from having their payments processed by a bank in a country with a low interchange fee (and thereby saving money).
But how much could retailers potentially be saving? How much do MasterCard’s interchange fees vary between European countries?
Here’s a map showing the interchange fees MasterCard charges for domestic chip & PIN credit card transactions.
[The fee data is from MasterCard’s per-country interchange documents available here, as of July 2015.]
With fees ranging from as little as 0.3% or less to as much as 1.47%, without the cross-border restriction in place merchants in some high-fee countries could make savings of 1% or more of their card turnover. That would be a huge gain for some retailers, particularly those with the slimmest margins.
But will MasterCard feel forced to relax their rules? As Duncan Robinson of the Financial Times reports, the Commission could potentially fine MasterCard nearly $1 billion for antitrust breaches, so MasterCard will at least need to take these objections seriously.
What do you think will be the outcome here? Will we see MasterCard change their rules? And what impact would that have on the European acquiring industry?
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