MasterCard Interbank Fees Draws EU Alarm

(CN) - The European Commission said Tuesday that it will probe whether Mastercard stifles competition by charging interbank fees to foreign tourists shopping in the EU.

The regulatory body banned interbank fees for all cross-border transactions by EU customers in 2007, and Mastercard is fighting that ban in Europe's highest court.

Commissioners said they are also concerned with the similar fees that Mastercard charges non-European cardholders for transactions within the European Economic Area (EEA).

In addition to the fees charged to foreign tourists, the commission said it is also looking into Mastercard tactics that may keep merchants from getting better rates offered by other banks. Regulators also believe Mastercard abuses commission rules requiring merchants to honor all cards for its own advantage.

If the allegations prove true, Mastercard's practices constitute anti-competitive behavior that violates the EU's antitrust laws, the commission said.

Interbank fees are typically passed on to merchants, leading to higher fees that slow down business and ultimately harm consumers, it noted.

The commission's announcement comes on the heels of a similar investigation into Visa's fee-charging scheme. To counter future problems, regulators said they will introduce definitive legislation on interbank fees this summer that will "ensure legal certainty and a durable level playing field across the EU for all providers."