Mastercard has lost its appeal against a European Commission ruling which declared charges imposed on UK retailers for processing credit and debit card payments from other EU countries were anti-competitive and unlawful.
The European Union General Court today upheld the European Commission’s 2007 ruling.
The cross-border fees, known as interchange rates, mean that retailers pay a fee on transactions purchased on credit card.
The fees hit retailer’s profit margins and are sometimes passed on to the customer.
The British Retail Consortium initiated an investigation in 1992 after complaining about the multilateral interchange fees for cross border card transactions. The European Commission ruled that charges violated the European Commission Treaty.
It said the charges increase the cost of accepting cards but do not lead to proven benefits to the consumer. Card operators justify the charges by using them to cover customer benefits such a 0% interest on payments or card reward programmes.
But Mastercard said it intends to appeal the judgement a second time.
Mastercard Europe president Javier Perez said: “MasterCard balances the interests of both consumers and retailers, so that each party pays its fair share of the costs for the benefits it receives.
“Today’s ruling, if it stands, would upset that sharing and tip the balance decidedly against consumers. It would also threaten the continued delivery of the most advanced electronic payment technologies in Europe which, in turn, are essential to facilitating business and driving economic growth.”
British Retail Consortium director general Stephen Robertson welcomed the ruling but said the legislation should be extended to fees levied on domestic transactions too.
“This is a historic and highly significant decision on card charges for transactions between European nations but what comes next is crucial. And that should be fairer costs for customers and retailers whenever they pay by card,” he said.
“People deserve the same treatment on card charges when buying within the UK. Hundreds of millions of pounds are at stake. The Office of Fair Trading should follow this landmark European ruling with rapid action here.”
Consultancy CMS Payments Intelligence has backed the call for regulation of the domestic interchange rates which it calculates could save British retail businesses up to £700m each year. It is lobbying government on the subject with support from Morrisons, Dixons, Poundstretcher and Aldi.
CMS senior payments consultant Alistair Combes said: “Over the past two years fees to UK retailers have increased by £150m. This is a huge increase in fees and retailers do not have the ability to negotiate on the interchange rate.”