By Simon Zekaria - 6th May 2004
In a long-running probe, EU regulators have welcomed a climb-down by credit card giants Mastercard and Visa to publish their European cross-border fees on-line.
The two companies will both set down on their respective websites the fees they charge to retailers - such as resturants and shops - who accept credit cards issued in a different EU country.
It is the result of an inquiry since 1997 that has focused on both on making information available, and pricing methods of the card giants.
Brussels has longed feared so-called ‘interchange fees’ MasterCard and Visa levy on cross-border transactions - set at around 1 per cent per purchase - paid by retailers' banks to card-issuing banks, are being abused to garner the highest rate of return.
Mastercard and Visa claim the fees, far from being a restrictive pricing agreement, are necessary to protect retailers and consumers from credit fraud.
By making the sums public, the EU claims retailers will be better placed to negotiate better rates with the banks - so potentially passing on the savings to the consumer.
The European Commission ruled against Visa in July 2002, forcing the company to disclose the full details of cross-border fees.
Visa also agreed to a 20 per cent reduction in the charges in response to pressure from Brussels.
But retailers complained the banks were slow to implement the decision and affecting competition in the sector.
Whilst the EU’s competition watchdog will monitor the commitments made by Visa, it will continue to probe rival card company Mastercard for its rules and agreements on cross-border fees.
In October 2003, Brussels sent Mastercard a ‘statement of objections’ detailing concerns; the first step in full antitrust proceedings.
Brussels has also warned that consumers can expect more investigations by the commission into the credit card sector.
“It is a moving target,” said a commission official on Friday.
“The payments cards technology moves very fast."
Whilst Visa is publishing the fees with immediate effect, there will be a few days delay before Mastercard updates its website.
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